What is your expected CTC?
The most common question that the interviewer asked you in an interview….
CTC (Cost to company) is the amount that the employer is willing to pay to the employee.
The most common misconception about the CTC which every fresher has, is that they assume CTC as their in-hand salary. For example, CTC mentioned is 8 LPA (67000 p.m) in your offer letter may not be your in-hand salary.
Your salary may include many other components such as Bonus, PF contribution both of employer and employee, Professional tax deduction, TDS deduction, insurance, gratuity, etc.
Now let’s take an example from one offer letter to have more clarity –
| Salary Components | Amount P.A |
| Basic Salary
House Rent Allowance Leave Travel Allowance Special Allowance |
3,00,000
87,000 54,000 3,20,500 |
| Gross Salary | 7,61,500 |
| Professional Tax
Employee’s Contribution to PF |
2,500
36,000 |
| Net Salary | 6,99,550 |
| Employers Contribution to PF
Gratuity Variable Bonus |
36,000
14,450 4,50,000 |
| Total CTC | 12,00,000 |
You can clearly see the difference between gross salary and net salary component & Total CTC offered in the offer letter.
Let’s see the meaning of each and every component Mentioned –
1. Variable Bonus – This is the performance-based bonus offered to you and you will receive this portion on completion of one year(example) of employment and may change based on your performance. That means it is not a fixed amount of pay it can be 450000 or even 100000.
2. Gratuity – Gratuity is the amount that will be paid on completion of 5 years of employment with the same company. So if you leave the organization let’s say after 2 years then you will not be eligible for this amount.
3. PF Contribution– It’s the provident fund contribution by the employer and the employee. The employer’s contribution will be 12% of your basic salary and the same percentage will be contributed by employee i.e 12% ( can contribute more but not less than that). This amount you will receive on retirement or when you leave the organization. But if you are leaving before one year then most of the companies do not pay this amount.
4. Professional Tax– It is the tax paid to the government per month. It’s the fixed amount i.e 2500 P.A.
5. Net salary – This is the salary which you will receive in your account. In our example, it is 699550. But it is before TDS that means after TDS it will reduce even further.
Other components may differ in various companies it may not be the same as mentioned in our example. from example, you can see the clear difference between the Total CTC offered by the company and the actual in-hand salary. Before accepting any offer letter don’t be in a myth that you actually going to receive that amount. Do proper analysis.
Tip – When the employer asked you about the CTC then clearly say the Fixed portion and Total CTC you are accepting. E.g I am expecting a Fixed salary of 9,00,000 and a variable portion of 3,00,000.
Tip 2 – You can easily calculate your in-hand salary from various sites. Just google In-hand salary calculator India.
Author Bio
I am giving my share of pf rupees 2546/ which is in my salary slip.Also my company is giving the same amount in my pf ,but it’s not in my salary slip.
can I add both amount in my CTC