Cost to company (CTC) is a term for the total salary package of an employee, used in countries such as India and South Africa. It indicates the total amount of expenses an employer (organization) spends on an employee during one year. It is calculated by adding salary to the cost of all additional benefits an employee receives during the service period. If an employee's salary is INR50,000 and the company pays an additional INR5,000 for their health insurance, the CTC is INR55,000. Employees may not directly receive the CTC amount.
Video Cost to company
Difference between CTC and pay slips
The CTC can include many elements in addition to salary/wages, such as health care, pension and allowances for housing, travel and entertainment. Tax is also deducted from the cash amount the employee receives directly. The term CTC is used by companies to more accurately reflect the incremental spend per employee (the concept of Direct Cost) from the perspective of an organisation. Another way to look at CTC is: all the money that would not need to be spent if the number of employees is reduced by one. Obviously, the indirect cost like the cost of facility, the support teams like HR, IT, Management, etc would still be incurred and hence not included in CTC. Therefore, the CTC should not include any component, that can not be attributed directly to the employee. A hypothetical breakdown of CTC is given below:
Break up of take home salary:
Maps Cost to company
References
See also
- Employment
Source of the article : Wikipedia
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