COST TO COMPANY (CTC)

Cost to company is a term which essentially implies the

amount of expenses the company will spend on an
employee

COMPONENTS OF COST TO COMPANY SALARY

Basic
Dearness Allowance (DA)
Incentives or bonuses
Conveyance allowance
House Rent Allowance (HRA)
Medical allowance
Leave Travel Allowance or Concession (LTA / LTC)
Vehicle Allowance
Telephone / Mobile Phone Allowance
Special Allowance

Example
Say your basic is Rs. 15,000 per month, DA
is Rs. 10,000 per month, you get
conveyance allowance of Rs. 800 per
month, and you get HRA of Rs. 4,500 per
month. So, your package so far is Rs.
3,63,600 per year.

COMPANYS CONTRIBUTION TO
PROVIDENT FUND (PF)
It is mandatory for you to contribute 12% of your basic
towards provident fund (PF). Your employer makes an equal
contribution (12% of your basic) to your PF account.
So, although this amount is not given out to you every
month, for your company, it is an expense that incurs on you
every month. Therefore, this forms a part of your CTC pay.
Example
12% of your basic is Rs. 1,800 per month. That is, Rs. 21,600
per annum. Your CTC package becomes Rs. 3,85,200.

REIMBURSEMENTS
Various reimbursements that you get from your company can also
form a part of your CTC package.
This includes reimbursement of:
Medical bills
Phone bills
Magazine subscriptions
Book purchases, etc.
Example
Say you get reimbursement of medical bills of upto Rs. 15,000.
So, your CTC package becomes Rs. 4,00,200.

LIFE INSURANCE AND

HEALTH INSURANCE
Most respectable employers provide free health insurance
cover to their employees and their dependents. Some
companies also provide life insurance for their employees
free of cost.
The premium amounts paid for such insurance on your
behalf can be included in your CTC salary.
Example
Say you get a health insurance cover of Rs. 1 Lakh for
yourself and your family. The premium for this is Rs. 2,000.
Thus, your CTC package becomes Rs. 4,02,200.

MEDICAL FACILITIES
Many companies have in-house health centers,
hospitals or other health care facilities where
medical care is provided free of cost to employees.
Companies work out a per-employee cost for such
facilities, and can include that in your CTC pay
package.

TRANSPORT FACILITIES
Many companies provide free transport
facility to their employees from their place of
work to the job location.
The cost of such transportation can be added
to your CTC package.

SUBSIDIZED MEALS
Many companies run canteens or cafeterias for their
employees, which provide subsidised meals to the employees.
Such subsidy can be included in your cost to company package.

Example
Lets say your company provides you lunch for Rs. 10, and the
actual cost of that lunch is Rs. 25. Thus, there is a subsidy of Rs.
15 per meal.
For 21 working days in a month, this is Rs. 315. Or, Rs. 3,780 per
year. Thus, your CTC package becomes Rs. 4,05,980.

Taking it too far . . .

OFFICE SPACE RENT &

OFFICE PHONE BILL
There are many companies especially large investment banks
that include your office space rent in your CTC package. The
bill for the office phone that you use can be included in your
CTC salary too.

Example
Lets say your office is in CP in Delhi. Your have a small cubicle,
say 6 feet by 8 feet (48 square feet). Lets say the going rate
for rent for office space in that area is Rs. 200 per sq. ft. per
month.
What is the cost of your cubicle in that case?
Its Rs. 200 * 48 = Rs. 9,600 per month, or Rs. 1,15,200 per year.

A NOTE ON GOVERNMENT SALARIES

What extras do government servants get? Heres a sample list:
The 12% of basic that the government deposits in their PF accounts,
just like private companies
Membership of government clubs or gymkhanas
Free stay at various circuit houses and government guest houses
Free telephone connection at home
Free car with driver
Reimbursement of newspaper bills
Free use of many libraries
In case of defense personnel (Army / Navy / Air Force), a huge subsidy
on items bought from their canteens (like groceries, appliances,
etc.)

THANK YOU

Samridhi Verma
Sahil Sankhla