Cost to Company (CTC) is a term used to describe an investment without return.

Travel expenditures, interviewing, spending time with potential customers can all be interpreted as CTC's.

Cost to Company can also be used to refer to the total cost that an organization is spending towards their employee including the Salary, Perks, Cost related to benefits, Cost related to hiring, Training, Retirals, Statutory Contributions etc

Cost to Company is a buzz word to describe how the company can slowly pay you less and less, and remove all your benefits, until you are "self funded" - in other words you pay for all your "benefits" yourself, while the company receives the tax benefits for these payments. This improves their profit ratio, and if this system is extrapolated, you will eventually pay the company to work there. So you'll need a second job to fund this. :-)

CTC - Cost to company is a trick of a company and HR department, to show we are paying a big salary, but unfortunatly it is just bubble. They overload total expences of human resorces on salary, and show that they are paying this much salary to the staff. but actualy they pay less and show more. For example....your salary is 6.00 Lacs p.a. Means ... you are getting 50,000/- per month. But actuly person gets only 25,000/- per month...all other money is deducted for facilities.. Means we are paying for getting facilities, but company shows they are giving us good facilities in the organization. In short, we pay from our salary for getting facilities, but company says they are giving good facilities to there staff. So you are paying for even unwanted facilities which you dont need. Before deciding CTC, ask for breakup of facilities.

TO COMPANY

TO EMPLOYEES

Cost to company is a term which essentially implies the amount of expenses the company will spend on an employee in a particular year. What may be an expense for the company need not necessarily be salary for the employee.

Cost to company is an amount projected by the company as salary but is never what is actually received by the employee in cash.

Salary like Basic, DA, HRA, Allowances

Perquisites and Reimbursements given to employees (i.e.) - bonus, incentives, reimbursement of conveyance/medical/telephone/, benefits extended through various schemes like housing/vehicle/furniture/ Air-conditioners etc.

Contributions that the company makes for the employees like PF, Super Annuation, Gratuity, Medical Insurance, etc.

Reasonable estimates of Leave Encashment, Stock Option Plans and Non cash concessions Tax Benefit on Stock Option plans only.

As you probably gauged, CTC is not the same as take home. Your take home is always lower than your CTC. Besides examples mentioned above, there are two major components that eat into the CTC. They are:
1. Tax liability The company calculates your tax and deducts it every month from your CTC. This includes income tax as well as professional tax. 2. Contribution to PF Here is the confusing part. Provident fund contribution has two sides the employers contribution and employees contribution. The employers contribution is included in the CTC as it is a cost that the company incurs to employ you. This is usually 12 per cent of the basic salary. However, this contribution is not paid out to you monthly. It is directly deposited in your PF account and paid to you when you retire or resign. There is also employees contribution to PF. This amount (usually 12 per cent of the basic salary) is deducted from your monthly salary and deposited in your PF account.

When ever the company imparts training that to CTC of the company in a way company would have to bear the cost of imparting training(trainer expenditure,equipments,loss of work etc) then the company have to promote, appraise the employee that all adds to cost of the company.

Gross Per Month = Sum of all the above. GrossPer Annum= 12*Gross/Month PF Contribution= 12% of Basic/Annum ESIContribution = 4.75% of Gross/Annum Medical = The mediclaim facility provided to an employee who are not covered under ESI as the maximumceiling for ESI is 10000/Month. Getting more than this will be covered under Mediclaim or it depends on company policy EX-Gratia/Bonus = A fixed amount asBonus Annual Fixed GrossCost= Gross/Annum+ Ex-gratia Annual Total Cost = AFGC + PF+ESIC Annual total cost is also called as CTC.

Hope now it will be very much clear to you, if you have any query feel free to ask.