The 3 Important Aspects of Salary: Net, Gross, CTC

Job decisions can be tricky if you don’t know the basic terms and methods used in the industry. While you prepare your subject matter and CV for the interview, it is also essential to know enough about the package and facilities the company is providing you.

You don’t want to look blank when the interviewer finally ask you, “So, Mr Wilson, what is your expected CTC?”. You must know the different techniques used to determine and describe your salary and its components.

To prepare you better, we have discussed three main terms related to salary and payments.

The 3 Important Aspects of Salary

Net Salary:

Net salary is the take-home amount paid to the employee after deduction of tax, PF, and other allowances. Net salary is the in-hand salary that the employee is paid by the company every month.

Gross Salary:

Gross salary is the amount that remains after deducting provident fund (PF) and gratuity from CTC.

Gross salary is the amount before the deduction of taxes and includes allowances like a holiday benefit, travel, overtime pay, and bonuses. It is generally expressed in yearly amounts.

CTC:

CTC costs the company per employee and includes salary and all other benefits offered to him. The cost to the company or CTC consists of the basic salary structure, house rent allowance (HRA), provident fund(PF), medical insurance and all other special funds that the company offers to its employees.

CTC is the total of direct benefits, indirect benefits and savings contributions to the employees. It is used by employers to determine the cost they have to incur for each employee every year.

Now that you know all the terms, you need not get confused when they are discussed.

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