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. CTC Gimmick
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. Components of CTC
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 Calculation of CTC Basic DAHRATAOther AllowanceMobile Reimbursement / Month Gross Per Month = Sum of all the above.Gross Per Annum= 12*Gross/Month PF Contribution= 12% of Basic/AnnumESI 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 BonusAnnual Fixed Gross Cost= Gross/Annum+ Ex-gratiaAnnual Total Cost = AFGC + PF+ESICAnnual total cost is also called as CTC.
Provident Fund 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% ESI
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. HRA
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 Professional tax
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). Leave Travel Assistance
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 Gratuity