Therefore, if the basic salary is too high, it will result in increased tax and PF liabilities, and if it is kept too low, it could violate the minimum wage norms.Ģ. It accounts for around 40-60% of the CTC and is fully taxable. It can vary depending on the job location, industry and designation. Basic Salary: This is the fixed component of the salary, excluding any benefits and privileges. Some companies calculate it by adding the employer’s contribution towards PF (Provident Fund) and Gratuity to the gross salary.įun Fact: RazorpayX Payroll platform provides this as a configuration option to users, so you can choose how to define the CTC structure for your employees.
It includes various components like basic pay, provident fund, allowances, etc. Having said that, it is essential to note that CTC is never equal to the take-home pay received at the end of the month.ĬTC is the total amount spent by the company on an employee, whether directly or indirectly. The CTC, or cost-to-company, is the total salary package that the company offers an employee during recruitment.
