Difference between Salary and CTC

Key difference: A salary is the payment or remuneration that one receives in return for work and/or services provided. 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 salary is stipulated by the current market rates for people doing similar work in similar industries in the same region.   It may also be dependent on the qualifications of the employee and the amount that the company can or is willing to pay to hire and/or retain those qualifications.

Also the number of people that are capable of providing the same service or do the same kind of work also has an impact on the salary, for example, if a lot of people can do that job, then the salary would be lower as a number of those people would be vying for that single job, whereas, if there are a lot of jobs but not enough people to fill those jobs, then the company would be willing to pay a larger salary to fill that position.

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.

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: risesmart.com, nitekrawler.wordpress.com

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