Cost to Company (CTC) is the amount which an employer spends to hire and employee by creating a relationship of employee and employer.
Employee gets CTC as per his or her profile and level of skill.
The CTC amount which a company pay to her employees is basically the sum amount of Direct Benefits (Fixed Salary), Indirect Benefits (Perquisites reimburse by Employer on behalf of employees) and Savings Contributions (EPF, ESIC)


Here is the breakdown of CTC part in details
Direct Benefits (DB)– This is the amount which employee got as fixed component on monthly basis in his gross salary and this gross salary is subject to the government tax For Example – Basic, Dearness Allowance, House Rent Allowance, LTA etc.
Indirect Benefits (IB) – This is additional benefit (Non-Monetary) which company provide to her employees and employee enjoy that benefit without paying for them although this is the benefit to employee hence company charged a perquisite value as per income tax rule.
Example – Interest Free Loan, Company Lease Accommodation etc.
Savings Contributions- It is again a monetary benefit which added to the employee CTC. Example EPFO contribution ESIC etc.
Here I have taken an example of CTC to let you clearer about the bifurcations of CTC
Total CTC | Yearly | |
CTC | 1,100,000 | |
Pay Heads | Yearly INR | CTC Bifurcation |
Basic Salary | 440,000 | Direct Benefits |
House Rent Allowance | 220,000 | Direct Benefits |
Personal Pay | 1,54,369 | Direct Benefits |
LTA Reimbursement | 36,667 | Direct Benefits |
Vehicle & Running Maintenance | 100,000 | Direct Benefits |
Club & Entertainment | 75,000 | Direct Benefits |
Gross Earning (A) | 1,057,236 | |
Employer Provident Fund | 52,800 | Saving Contributions |
Gratuity | 21,164 | Saving Contributions |
Total B | 42,764 | |
Total CTC (A+B) | 1,100,000 |
What is Gross Salary
Gross Salary is basically is amount paid to the employee before deduction like Tax, PT,PF,ESIC and any other deduction and it includes payments like Bonuses , Over Time Payment etc.


What is Net Salary or Take-Home Salary
We generally used to say Take-Home Salary to Net Salary. Net Salary is the amount which comes after deduction of PF,PT,ESIC,TDS and other deductions and this amount paid to the employee as Salary.


Take Home Salary = Gross Salary – IT – PT – ESIC – (Other Deduction if any)