CTC Breakup
Full form: Cost to Company Breakup
Salary & HRCTC (Cost to Company) includes everything the employer spends on an employee: basic salary, HRA, allowances, PF contribution, gratuity provision, insurance, and other benefits. Understanding CTC breakup helps evaluate the actual take-home vs what looks good in the offer letter.
In detail
Typical CTC components:n1. Basic salary: 40-50% of CTC (forms basis for PF, HRA, gratuity)n2. HRA: 40-50% of basic (metro employees benefit most from HRA exemption)n3. Special allowance: balancing figuren4. LTA: 1-2 months basic per yearn5. Medical reimbursement: up to Rs 15,000/year (new tax regime removes this benefit)n6. Employer PF: 12% of basic (Rs 1,800 max for Rs 15K+ basic)n7. Gratuity: 4.81% of basic (provision)n8. Group insurance: health + life (value varies)nnThings that inflate CTC but don't come to you:nGratuity provision (received only after 5 years)nGroup insurance (not payable to you)nRetention bonus (conditional)
Formula
Real-life example
Offer: Rs 18L CTC. Breakup: Basic Rs 7.2L + HRA Rs 3.6L + Special allowance Rs 3.2L + Employer PF Rs 21.6K + Gratuity provision Rs 34.6K + Group mediclaim Rs 60K + Group term Rs 30K. Deductions: TDS Rs 1.8L + Employee PF Rs 21.6K + Professional tax Rs 2.4K. Take-home: Rs 18L - Rs 1.8L - Rs 21.6K - Rs 2.4K - CTC-only items Rs 1.46L = Rs 14.5L/year = Rs 1.21L/month.