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Tarun Suthar

ย โ€ขย 

The Institute of Chartered Accountants of Indiaย โ€ขย 1m

How to Calculate Employee Cost to Company (CTC) & Understand In-Hand Salary. ๐Ÿค” 1๏ธโƒฃ 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 + Employerโ€™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 2๏ธโƒฃ In-Hand Salary (Net Wages): This is the actual amount received by the employee after deductions: โ€“ Employeeโ€™s contribution to PF & ESI โ€“ Income Tax (TDS) โ€“ Professional Tax โ€“ Loan/Advance deductions โ€“ Any other voluntary deductions In-Hand Salary = CTC โ€“ All Deductions Note: Effective Working Hours = Total Hours โ€“ Idle Time Wage Rate per Hour = CTC รท 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.๐Ÿ˜‚

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