HR glossary
Indian salary and HR terms explained simply, with real examples. Updated for the 2026 Labour Codes.
CTC (Cost to Company)
CTC, or Cost to Company, is the total amount an employer spends on an employee in a year. It includes salary, the employer's PF contribution, the gratuity provision and any variable pay. CTC is not what reaches your bank account - that is your in-hand or take-home salary.
ReadProvident Fund (PF)
Provident Fund (EPF) is a retirement savings scheme run by the Employees' Provident Fund Organisation (EPFO). Each month the employee and the employer each contribute 12% of the employee's basic pay (basic + DA). The money earns interest every year and is paid out on retirement or exit, subject to EPFO rules.
ReadGratuity
Gratuity is a lump-sum payment an employer makes to an employee for long service, usually when they leave or retire. It is 15/26 of the last drawn monthly basic + DA for every year of service. Regular employees qualify after 5 years; fixed-term employees after 1 year under the Code on Social Security, in force from 21 November 2025.
ReadFull and final settlement (FnF)
Full and final settlement (FnF) is the last payment an employer makes when someone leaves. It covers salary for the days worked, leave encashment, notice pay, bonus and gratuity, minus recoveries such as unserved notice or advances. Under the Code on Wages, wages must be paid within two working days of the exit.
ReadNotice period
A notice period is the time between resigning, or being told to leave, and your last working day. For most jobs in India it is set by your appointment letter, often 30 to 90 days. For workers who are retrenched, the Industrial Relations Code requires one month's written notice or wages in lieu.
ReadBasic salary
Basic salary is the fixed core of your pay, before allowances. Basic plus dearness allowance (DA) is what the law calls "wages". Under the Code on Wages, in force from 21 November 2025, wages must be at least 50% of total pay, so PF and gratuity cannot be cut by keeping basic low.
ReadGross salary
Gross salary is your total pay before deductions - basic, DA, HRA and other allowances. It is CTC minus employer-only costs like employer PF and gratuity. Your in-hand salary is gross minus your own PF, professional tax and income tax (TDS).
ReadUAN (Universal Account Number)
UAN, or Universal Account Number, is a 12-digit number the Employees' Provident Fund Organisation (EPFO) gives every PF member. It stays the same for your whole career. Each employer opens a new PF account under the same UAN, so your PF history moves with you.
ReadForm 16 (now Form 130)
Form 16 was the certificate your employer gives you showing your salary and the tax (TDS) deducted in a year. Under the Income-tax Act, 2025 and Income-tax Rules, 2026, it is replaced by Form 130. Employers must issue it by 15 June after the tax year ends.
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