The total cost that an organization is
spending towards their employee including
the Salary, Perks, Cost related to benefits,
Cost related to hiring, Training, Statutory
Contributions etc.
the amount the company will likely be
spending on the employee and this could
include anything from training in Bahamas
(which you don’t need) to a Laptop which the
employee might have to return when leaving
the company.
there could be pay-outs which are one time,
for example, joining bonus, relocation
expenses, amount which will not be coming
to the employee year on year
CTC - Cost to company is a trick of a
company and HR department, to show we are
paying a big salary, but unfortunately it is
just bubble.
They overload total expenses of human
resources on salary, and show that they are
paying this much salary to the staff but
actually they pay less and show more.
For example....your salary is 6.00 Lacs p.a.
Means ... you are getting 50,000/- per
month. But actually person gets only
25,000/- per month...all other money is
deducted for facilities
Basic
D.A
HRA
E.A( Educational Allowance)
T.A
L.T.A
Leave Encashment.
PF subscription of the employer share.
cost of any housing or other accommodations provided by the employer.
Cost for Vehicle provided or vehicle allowance.
ESOP
overheads/Loans taken by the employer on the employee transfer
Insurance (Group)
Super Annuation
Gratuity
Medical Insurance
Bonus
Incentives
reimbursement of medical/telephone/petrol
benefits extended through various schemes like
housing/vehicle/furniture/ A/C/ etc....
Food Coupons
Gestation period expenses ( when a employees joins it takes
minimum 2 months to perform to his fullest )
Place to sit / (because it has some market value)
Stationary cost
company's sponsor tours,
gifts and incentives ( if any )
Basic
DA
HRA
TA
Other Allowance
Mobile Reimbursement / Month
Gross Per Month = Sum of all the above.
Gross Per Annum= 12*Gross/Month
PF Contribution= 12% of Basic/Annum
ESI Contribution = 4.75% of Gross/Annum
Medical = The mediclaim facility provided to an
employee who are not covered under ESI as the
maximum ceiling for ESI is 10000/Month.
EX-Gratia/Bonus = A fixed amount as Bonus
Annual Fixed Gross Cost= Gross/Annum+ Ex-
gratia
Annual Total Cost = AFGC + PF+ESIC
Annual total cost is also called as CTC.
Employee 12%
(Basic wages, dearness allowance, cash value of food concession and retaining
allowances if any)
Employer 13.61%
Contribution:
3.67% = Provident Fund (A/c No.1)
8.33% = Pension Fund (A/c No.10)
0.5% = EDLIS -Employees Direct Linked Insurance Scheme (A/c No.21)
Administrative Charges:
1.10% of emoluments = Provident Fund (A/c No.2)
0.01% of emoluments = EDLIS (A/c No.22)
If gross salary is Less than or equal to
Rs.10,000
Employers contribution - Gross salary*4.75%
Employee contribution – Gross salary * 1.75%
for metro 50% on basic
for non metro 40% on basic
Conveyance allowance = 15 or 20% of Basic
transport allowance can be a fixed amount.
P.Tax Salary up to 2001 Rs. 16.00
Salary up to 3001 Rs. 25.00
Salary up to 4001 Rs. 35.00
Salary up to 5001 Rs. 45.00
Salary up to 6001 Rs. 60.00
Salary up to 10001 Rs. 80.00
Salary up to 15001 Rs. 100.00
Salary up to 20001 Rs. 150.00
Salary above 20001 Rs. 200.00
◦ LTA TYPE-I (in lieu of LTC Type-I (Home Town):
Reimbursement of 80% of the First class Rail fare for
1250 Kms each way subject to maximum of four full
tickets (Self, Spouse and Children).
◦ LTA TYPE-II (in lieu of LTC Type-II (All India):
Reimbursement of 90% of First class Rail fare for 1500
Kms each way subject to maximum of four full tickets
(Self, Spouse and Children).
Only Medical Reimbursment which is paid Rs.
15000/- per year is exempt as per IT Act.
(80C of Income Tax)
Dearness Allowance is calculated based on
Cost of Leaving Index(Shimla points) based
on cost and dearness of commodities
Gratuity is payable only after 5 years or 60 months
15 days salary is payable for every completed year.
So we can say that in 5 years 2 and half months salary is payable
(only basic and DA) or we can say that in 60 months 2.5 months
salary is payable.
Now calculate how much percentage is 2.5 of 60 as under:
2.5 x 100/60
= 4.16
hence gratuity is payable @ 4.16% of basic and DA
