Are CTC and gross salary the same?

No, gross salary and CTC (Cost to Company) are not the same. CTC represents the total annual cost an employer spends on an employee, while gross salary refers only to the employee’s total earnings before deductions. CTC includes additional components such as the employer’s contribution to provident fund, gratuity, health insurance, and other company-paid benefits. Gross salary, on the other hand, excludes these employer-side expenses.

CTC (Cost to Company)

• Definition: The overall annual expense a company incurs for employing a person.
• Includes:
  • Gross salary
  • Employer’s contribution to Provident Fund (PF)
  • Gratuity
  • Health or life insurance premiums
  • Other benefits and allowances (e.g., meals, transport, or bonuses)
• Purpose: Reflects the total value of an employee’s compensation package from the employer’s point of view.

Gross Salary

• Definition: The total earnings of an employee before deductions.
• Includes: Basic pay, House Rent Allowance (HRA), and other regular allowances.
• Excludes: Employer’s contributions such as PF and gratuity, which are part of CTC but not paid directly to the employee.

Take-Home (Net) Salary

• Definition: The actual amount credited to your bank account.
• Calculation: Gross Salary minus deductions like income tax, employee PF contribution, and professional tax.