Cost to the company is a term mostly used in organizations which pay Salary to their employees. CTC means all money which is spent by the company on you in return to your work in the company. But, What is the full form of CTC?
CTC Full Form stands for “Cost to Company”, also CTC full form in Hindi is “कंपनी को लागत.”. CTC includes many things like Dearness allowance, House allowance, Salary, Fuel allowance, etc. Your respective employer provides all these allowances.
Let’s take an example of Cost to the company. Suppose you have got a job. You are extremely happy as your CTC is quite high. Your Cost to company as stated in company official mail is 12,00,000 Rs/month. You are thinking that you will get 1 lakh rupee per month. You already decided that you will buy your dream car on EMI. The EMI will be near 50,000 rupees per month. Rest 50,000 rupees will be entirely yours to spend and save and ROC full form.
However once your Salary gets credited into your account, you are surprised as only 60,000 rupees is credited into your account. You will become angry and rushed to the HR department. You asked about them your remaining 40,000 rupees. They were amazed at your naive behaviour and laughed. Then they explain to you about CTC concept. They divided your CTC into different parts which are as follow-
1. Basic Salary- 60,000 Rupees
2. Medical Allowance-5,000 Rupee
3. House allowance- 20,000 Rupees
4. Other deductions- 5,000 rupees
5. Joining Bonus and Telephone allowance- 10,000 rupees
You were awestruck after knowing the truth behind the term “Cost to the company”. Your dreams shattered. Your dream bike has to wait for a few more years.
What is Included in CTC?
CTC includes following things generally-
1. Your fixed Salary includes:
· Basic Salary
· Few Dearness Allowance
2. Reimbursements allowance:
· Meal coupons
· Mobile/telephone bills
3. Retirement Benefits includes:
· Provided Fund
4. Other allowances:
·The Medical Allowance
· The Insurance and pension
· Bonus(fixed and performance dependant)
As you can see all these points, you will understand that what CTC truly means. Company is still paying you the same amount as stated in their offer, but some amount is in a different medium and not direct benefit is being given to you.
The respective company is deciding all these allowances amount according to their own decision and reason. So you are getting the same benefit as promised.
Why do Companies mention CTC instead of direct Salary?
It is an excellent question. To understand the aspect of this, we need to understand this question from the perspective of companies and organization. Cost to the company is a significant term for companies. There are very much tax and cost-benefit for companies.
Companies need to follow the guidelines of Government also. According to government guidelines, the company needs to pay its part of provident Fund for its employee. Not only that companies need to pay a part for gratuity also for their employees. These costs are born by companies. Now the company can’t pay you your direct Salary without including these costs. This additional Cost will bring havoc on company expenses and budget. So they need to cut the part from your Salary.
We will know that companies pay for your allowance too. This allowance includes Food and house allowance. To compensate them the company needs money, and again, they cut apart from your Salary. So the company uses the term Cost to company instead of Salary as CTC includes every expense paid by the company for your cause.
Q&A on CTC
Q1. What is the full form of CTC?
A1. CTC Full Form is “Cost to Company”
By:- Aaditya Soni