CTC Full Form

All of us would have come across the term CTC many a time. It could be when there is a discussion regarding placements or when you approach any financial institution for a salary. But are you aware of the CTC Full Form? Well read on all about CTC, what is CTC full form and what it entails for better understanding.


CTC Full Form

The full form of CTC is Cost to Company, i.e., the cost incurred by a company on an employee yearly. It is very different from the in-hand salary of an employee. In-hand salary will be every month, whereas CTC will be every year.

CTC full form comprises the basic salary plus the perquisites and other allowances. The take-home salary is devoid of many of CTC components and so will be lesser than CTC.

Compare & Apply Credit Card

What are the different components of CTC?

The different components of CTC are given below:

  • Basic Salary
  • Dearness Allowance
  • CCA
  • Employees Provident Fund (EPF)
  • Bonus
  • Incentives
  • House Rent Allowance
  • Medical Allowance
  • Leave Travel Allowance
  • Vehicle Allowance
  • Special Allowance
  • Telephone Bill/Mobile Bill
  • Conveyance Allowance
  • Perquisites

What is the difference between Gross Salary and Net Take-home Salary?

Gross salary is the Basic Salary + DA + HRA+Other Allowances every month.

Net Take-Home salary is also calculated on a monthly basis, but it is the salary after the statutory and other deductions from Gross Salary. The deductions will be EPF/PF, Income Tax, Professional Tax and other deductions as per the HR policies of individual Companies.

Define the components of CTC

Basic Salary 
Basic salary forms about 40 to 45% of CTC, and it is the largest component of CTC. The Gross Salary is calculated by adding the other components of the CTC to the Basic Salary. 
Dearness Allowance 
Dearness Allowance is fixed at a percentage of the basic salary and is generally provided to hedge the impact of inflation.  
CCA (City Compensatory Allowance) 
To compensate for the cost of living in larger cities, CCA will be paid to the Employees and will be a part of the gross salary. 
Employees Provident Fund 
It will be the Employer's contribution towards Provident Fund, which will be equivalent to the employees' contribution. 
Bonus is the profit of organisation shared among the employees who will generally be 8.33% of the salary. The percentage of share may, however, differ from organisation to organisation. Bonus can also be considered a token of appreciation of the good work done by the Employees and will be paid on a yearly basis. 
The performance of every employee will be evaluated on a yearly basis, and an additional remuneration will be paid. There will be a maximum limit set for incentive per employee, which again differs from organisation to organisation. 
House Rent Allowance 
It is a way of providing accommodation to the employee if he/she has to live in a rented house.  
Medical Allowance 
Medical allowance is provided by the Company for managing the medical expenses of the employee. This will be a fixed amount and will be added to the Basic Salary.

Leave Travel Allowance 
LTA is the fair cost for travel inland given by the Company. The cost of food and stay during the vacation should be borne by the employees. 
Vehicle Allowance 
When a personal vehicle is used for work, then the Company reimburses the cost incurred for the maintenance of the Vehicle. 
Special Allowance 
Special Allowance is a fixed amount provided by the Company over and above the basic salary to meet certain requirements. There are different categories of special allowance, some of which are taxable and others exempt from tax as well. 
Telephone/Mobile Bill 
Reimbursement of monthly mobile/telephone bill, which is again a fixed amount. 
Conveyance Allowance 
The Company provides for the cost incurred for commuting from residence to the workplace in the form of Conveyance Allowance.  
Perquisites are benefits that are non-financial and are awarded as per the position of the employee in the Company. It could be by way of a Car, Mobile Phone, Internet Connection, Accommodation etc.


With the confusion of understanding the difference between the CTC Full Form and the Take-Home Salary cleared, you will now l give the Take-Home Salary figure whenever you are asked about your monthly income. You approach a bank or any other financial institution for a loan, the first thing the concerned official will ask you is about your take-home salary. The net take-home salary will be considered while calculating the debt to income ratio and also the loan amount. The loan will never be based on the CTC.

CTC Full Form FAQs

What is CTC Full Form, and how is it different from Take-Home Salary?


CTC Full Form is Cost to Company, and it is the cost incurred by the Company per employee on a yearly basis. Basic Salary, DA, HRA, CCA, Various Allowances, Incentives, Bonus and Perquisites are the components of CTC.

Take-Home salary is the monthly pay-out that the employee receives into his bank account.

What is Gross Salary?


Gross Salary is Basic Salary+ DA+Allowances and before the statutory deductions like EPF, Income Tax and Professional Tax and any other deductions as per the Company's HR Policy.

How to calculate Net Take-Home Salary?


Net Take-Home Salary is arrived at by deducting Income Tax (TDS), EPF (Employee's Contribution), Professional Tax and considering other deductions as per individual Company's HR Policy from the Gross Salary.

Define Allowances


Allowances are monthly monetary benefits provided by the Company over and above the basic salary like House Rent Allowance, Medical Allowance, Vehicle Allowance, Conveyance Allowance, Food Coupons, City Compensatory Allowance etc.

How do you define Perquisites?


Perquisites are non-financial facilities like car, mobile phone, internet services and other requirements provided to the employee as per the designation.

How do you segregate Direct, Indirect Benefits and Saving Contributions that form a part of CTC Full Form?


Direct benefits are Basic Salary, CCA, HRA, DA, Medical Allowance, Vehicle Allowance, Conveyance Allowance, Special Allowance, Mobile Allowance, Bonus, Incentives, etc.

Indirect Benefits are Medical Insurance and Life Insurance Premiums paid by the employer Food Coupons, Accommodation leased by Company, Interest-Free Loans provided by the Company, etc.

Saving Contributions are Retirement benefits, Gratuity, and EPF (Employer's Contribution)

What is Gratuity?


Gratuity is a part of the salary and is generally calculated on the basis of the last drawn salary of the employee. The employee is entitled to the Gratuity on leaving the job either by resigning or on superannuation. The Gratuity will be paid only if the employee quits the Company after serving continuously for a period of 5 years.

How is LTA Calculated?


LTA is the allowance paid to visit any place within the country. Only the travel cost will be paid, and it will be calculated based on the Basic Salary and will vary according to the designation and native place of the employee. It will be 8.33% of the basic salary.

What is the basis for the calculation of an Employee's PF contribution?


In private sectors, the PF contributions are calculated based on the basic salary. It will be 12% of the basic salary. For instance, if the basic salary is 36000/- the PF contribution will be Rs. 4320/- p.m. The yearly contribution of the employee will be 51840, and the Employer will give an equal yearly contribution, i.e., 51840/-