How to Calculate Employee Cost to Company (CTC) & Understand In-Hand Salary. 🤔 1️⃣ Cost to Company (CTC): CTC represents the total amount a company spends on an employee annually. It includes: + Basic Salary + Dearness Allowance (DA) + House Rent Allowance (HRA) + Bonuses, Overtime, Commission + Perquisites/Allowances + Employer’s contribution to Provident Fund (PF) & ESI + Any other benefit offered This is often seen as the Gross Wages or Salary Package. CTC = Sum of All Earnings + Employer Contributions 2️⃣ In-Hand Salary (Net Wages): This is the actual amount received by the employee after deductions: – Employee’s contribution to PF & ESI – Income Tax (TDS) – Professional Tax – Loan/Advance deductions – Any other voluntary deductions In-Hand Salary = CTC – All Deductions Note: Effective Working Hours = Total Hours – Idle Time Wage Rate per Hour = CTC ÷ Effective Working Hours Understanding this helps both employers and employees plan finances better and ensure clarity. Well, If you're hiring interns, your cost is practically zero - so feel free to skip this post and relax.😂
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