HR glossary
What is 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.
What is inside CTC
- Basic salary - at least 50% of pay under the Labour Codes (from 21 November 2025)
- HRA and special allowance
- Employer PF - 12% of basic, on basic up to ₹25,000 a month (from 17 September 2026) unless the company pays on full basic
- Gratuity provision - about 4.81% of basic
- Variable pay or bonus, if any
- Sometimes insurance, meal cards or other benefits
CTC vs gross vs in-hand
- CTC: the full yearly cost to the employer
- Gross salary: CTC minus employer PF, gratuity and other employer-only costs
- In-hand (take-home, net) salary: gross minus your own PF, professional tax and income tax
Example - ₹12 lakh CTC (Karnataka, new regime, PF on the ceiling)
- Monthly CTC: ₹1,00,000
- Employer PF ₹3,000 and gratuity ₹2,405 come out first, so monthly gross is ₹94,595
- Your PF ₹3,000 and professional tax ₹208 (average) are deducted; income tax is ₹0 because taxable income stays under ₹12 lakh
- In-hand: ₹91,387 a month
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