There is a lot of confusion among people with regards to Gross Salary , Net Salary , Take Home Salary and CTC.
What do they Mean? Is it the same? Due to this confusion, each one has their own interpretation.
So when Mr ABC receives salary offer with a CTC of Rs 4,80,000/- lacs. ABC assumes he will get Monthly Rs 40000/-. (480000/12)
But this is not case. ABC may receive only Rs 28000/-.
This leads to a lot of dissatisfaction as ABC views a difference in what he was promised in his CTC offer letter and what he actually got in hand at the month .
When ABC talks to the HR. He is told that his CTC is the cost which is company incurs on him.It includes all the monetary and monetary benefits which the company provides him.So Rs 4,80000/- includes his monthly salary and also all benefits and perquisites the company provides.
Companies today view salaries in terms of CTC when they are recruiting. While head hunting, campus placement or routine recruitment a potential candidate is always asked his CTC.
COST TO COMPANY
When a candidate is hired, he/she is provided a salary offer by the company. The salary offer specifies the Cost to the Company (CTC) of the candidate i.e. all the salary components (fixed and variable), benefits and perquisites given by the company. The tax rules differs for each of the components.
The CTC is the total cost a company incurs on an employee and it includes all the monetary or non-monetary amount spent.
The below is an indicative list and the salary components, benefits, allowances offered differs from company to company.
GROSS SALARY VS NET SALARY
- Gross Salary: The salary before statutory deductions. (Basic Salary + DA + HRA+ Medical + Other Allowances)
- Net Salary (Take Home): There would be certain deductions in an employee gross salary as per labour laws ( Provident Fund , ESIC , Professional Tax etc) . After the respective dedcutions from gross salary the amount an employee receives is the Net Salary or Take home salary. e the amount received in hand every month or any period as specified in return of services provided.