CTC (Cost to Company) refers to the total amount of money a company spends on an employee, including their salary, benefits, bonuses, and any other perks. On the other hand, the in-hand salary is the actual amount that an employee receives after taxes and other deductions have been taken out.
▶ Here are some of the common deductions made from CTC:
✅ Income Tax: As per the Indian Income Tax Act, employees are required to pay tax on their income. The employer deducts the tax at source (TDS) and remits it to the government on behalf of the employee.
✅ Employee Provident Fund (EPF): Employers are required to contribute to the EPF on behalf of their employees. The employee’s contribution to the EPF is deducted from their salary, and the employer contributes an equal amount.
✅ Professional Tax: Professional Tax is a tax levied by the State Governments in India on salaried individuals. The amount of tax and the rules governing it vary from state to state.
✅ Health Insurance: Some companies offer health insurance as a part of the CTC. The premium for the health insurance policy is deducted from the employee’s CTC.
✅ Other Deductions: Other deductions that may be made from the CTC include employee contributions to the Employee State Insurance Scheme (ESI), Employee Stock Options (ESOPs), and any other benefits or incentives that are part of the employee’s compensation package.