The full form of CTC is Cost to Company, which is the total annual package an employee receives in a year for his services. The CTC is the total cost that the company incurs in employing that particular employee. Please note that CTC is not the actual pay as it has various components. It is often divided into Fixed, Variable, Insurance Cost and a few other components. So, some of the fresher candidates end up with a rude shock when they receive their first salary, and they don’t know the difference between the fixed component and the CTC. Let us learn more about CTC today.
As fancy as it may sound, CTC is not the take-home package. If you have a CTC of 12 Lakh, that doesn’t mean that you will get Rs 1 Lakh every month. There would be tax deductions, there could be a variable component, and there could also be a stock option provided to you. You need to factor in all these costs and arrive at a fixed component which is also your take-home salary. CTC also includes the cost of the facility provided to an employee. For example, the CTC would include the cost of insurance and the employer PF contribution as well.