The key terms like CTC, gross salary, basic salary, deductions, reimbursements, take-home salary, etc. can be confusing when you start your career in a company. Here we have explained these key terms that are used in the salary structure format to make it simpler for you to understand. Have a look at the terms used during the salary structure calculation:
- Cost to Company (CTC)
CTC = Gross Salary + Provident Fund + Gratuity
- Basic Salary
- Gross Salary
This is the amount which is calculated by adding the basic pay, and other allowances before the deductions and taxes are applied. It mainly comprises of bonuses, holiday pay, over-time amount, and several other differentials.
Gross Salary = Basic Pay + House Rent Allowance (HRA) + Other Allowances
- Take Home Salary
Take Home Salary = Basic Pay + HRA + Allowances - Income Tax - EPF - Professional Tax
- Employer Provident Fund (EPF)
This is an investment made by both, the employer and the employee, which acts as a lump sum amount which forms the part of the employee’s retirement benefits scheme. This amount is directly deposited in the employee’s PF account.
- Professional Tax
- Income Tax
The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.
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