It basically encapsulates the salary package of an employee. However, it is much more than the traditional salary. The CTC is the total amount of expense an employer is spending for an employee in a year.
It is paid periodically, i. Is pension income taxed as salary income? However, the pension received from the United Nations Organisation is exempt.
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More Latest News. Follow us on. In-hand salary refers to the actual salary that an employee takes home after every relevant tax deductions at source TDS have been completed. Best investment policies at lowest premiums. Top performing investment plans, better than mutual funds.
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Explore more on Fixed Deposit. Explore more on Tax. Terms like gross salary, net salary, CTC, etc, are often misunderstood for having the same meanings. Though they are used commonly, most people do not really know what words like take-home salary or CTC mean, and what their differences are. Read on to clear your doubts and to avoid any kind of heartburn that may be created later:. Salary is an amount paid by the employer to the employee in exchange for his services in the company either monthly or annually.
There are some important components of salary like net salary, gross salary, take-home salary, and cost to the company CTC that needs to be understood by every employee before proceeding for employment. CTC means the expenses that the company bears for hiring the service of its employee.
CTC includes all the salary components such as basic salary, house rent allowance HRA , travel allowance, pension fund, provident fund, medical insurance and incentives if there are any. CTC should not be confused with the take-home salary as this is a cumulative salary of all direct and indirect benefits. The breakdown of this salary on an annual basis is as follows:. Tanay Chatterjee is a year-old male who has just completed his MBA and has been selected in a finance company through his college campus with a basic salary of INR , There are a lot more components mentioned in his offer letter and now he wants to calculate the CTC offered by his company.
The simple meaning of Gross salary is the amount you get on the subtraction of gratuity and EPF aunts from the CTC offered by your company. Gross salary is still not the salary you will take home as there are more deductions to be made for taxes and overtime bonus, etc. Very suggestive from its name, this is the amount that the employee takes home.
It is also called the in-hand salary. This amount is calculated by subtracting tax amount and other additional bonus amounts from the gross salary of the employee.
As his salary falls between INR 2. Gross salary is the salary that is inclusive of basic salary, allowances, and bonuses without any deductions of tax, employee provident fund contribution, and gratuity. Gross salary should not be confused with the net salary or take-home salary as there are deductions to be made in this amount. Under the Payment of Gratuity Act, , employees can be paid a gratuity amount for the services provided by them over their years of employment. Employees are eligible to avail gratuity and other similar incentives by the organization only after a period of 5 years.
In case of an emergency like death, disability caused due to accidents, etc the employee can be provided with the amount.
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