Difference between CTC and Take Home Salary

Key difference: CTC stands for Cost to Company. The CTC is the total amount of expense an employer is spending for an employee in a year. The CTC includes the take-home salary (net salary) plus any and all deductions, as well as any other benefits as provided by the company.

CTC stands for Cost to Company. It basically encapsulates the salary package of an employee. However, it is much more than the traditional salary. The CTC is the total amount of expense an employer is spending for an employee in a year.

A salary is the payment or remuneration that one receives in return for work and/or services provided. It is paid periodically, i.e. over a specified interval of time, such as weekly, or more commonly, monthly.

A salary is essentially a fixed amount of money or compensation paid to an employee by an employer in return for work performed. It may be termed as a salary of x amount per hour, x amount per month or an annul salary of x amount.

The CTC includes the Gross Salary, which is the one on the pay slip, as well as any other benefits, such as company contributions to retirement funds, medical facilities, phone facilities, house facilities, travel allowance, meal allowance, etc.

The CTC is not the amount that the employee gets to take home. The take home amount is the Net Salary, which is Gross Salary minus any and all deductions. The deductions may include federal, state or local income taxes, any other taxes, as well as the employee contributions to retirement funds, medical facilities, etc.

In other words,

Net Salary = Gross Salary – Deductions

Hence,

CTC = Gross Salary + Other Benefits

OR

CTC = Net Salary + Deductions + Other Benefits

Essentially, the take-home salary (net salary) is quite less than the CTC offered to an employee. At times, the net salary may amount to between 35% to 50% of the CTC.

Image Courtesy: nitekrawler.wordpress.com, risesmart.com

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