How does Salary Calculator work?
Deductions such as Provident Fund (Employer and Employee), Professional Tax and sometimes Employee Insurance are standard components of the CTC a company offers.
What is CTC?
CTC = Direct benefits (monetary) + Indirect benefits (non-monetary) + Savings contribution (contribution to PF. etc.).
CTC is never equal to the amount of take-home salary of the employee. There are many components in the CTC that one does not receive as part of a take-home salary such as non-monetary benefits viz lunch benefits/Subsidized Meals & Food Coupons, Company Leased Accommodation, Life & Medical Insurance premiums paid by employers, travel facility being provided by the Company, social security benefits, etc.
Components of CTC:
1. Basic Salary
However, HRA is fully taxable if you don’t live in rented accommodation. HRA is usually fixed as 50% of the basic salary.
4. Medical Allowance
6. Professional Tax
– Stock options issued if any, are not considered as part of CTC.
– Various non-monetary benefits are not considered as part of CTC.
– Certain portion of the CTC can be allocated as a bonus.
If your Cost To Company (CTC) is Rs 12 lakh. The employer gives you a bonus of Rs 2,00,000 for the financial year. Your total gross salary is Rs 12,00,000 – Rs 2,00,000 = Rs 10,00,000. (The bonus is deducted from the CTC).