CTC Calculator

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How To Calculate CTC?

Cost To Company abbreviated as CTC is the all-inclusive annual package that sums up every expense made by employers for their employees in a year. It is the total amount (remuneration) offered to a candidate after he/ she has been shortlisted to start working with the organization.

CTC Calculator

Vaguely speaking, CTC equals the sum of earnings of an employee and the deductions made from his salary, both direct and indirect.

CTC = Earnings + Deductions

However, there is a universal CTC calculator to compute the same. The total amount includes monthly components such as Basic Pay, Allowances and Reimbursements as well as yearly elements like Gratuity and Annual Bonus etc. 

A lot of people know about this term and what it stands for, but the most frequently asked question is: how to calculate CTC? 

Let us walk through an in-depth explanation to this question:

There are a number of earnings that an employee gets, for instance, Basic Pay, Dearness Allowance, House Rent Allowance, House Rent Allowance, Conveyance Allowance and other allowances.

Similarly, there are deductions from the salary too such as Employees’ Provident Fund, Employees’ State Insurance, Professional Taxes, Tax Deducted At The Source among other deductions.

Now, using a salary calculator, you can simply enter the digits and you will get the CTC as output automatically.

Check it: CTC Breakup

For instance, 

If an employee earns a Basic Salary of INR 10,000, Dearness Allowance of INR 3,000, HRA of  INR 5,000, Conveyance Allowance of INR 1,000, Medical Claim of INR 2,000 and Special Allowance of INR 12,000

and,

The deductions from his salary include Professional Tax of INR 500, EPF of INR 1,500 and ESI of INR 500, then as per the salary calculator India uses, the CTC would be Earnings minus Deductions, i.e., 

[10,000 + 3,000 + 5,000 + 1,000 + 2,000 + 12,000 – (500 + 1,500 + 500)] = (33,000 – 2,500) = INR 30,500

Hence, it all comes down to a basic fact that CTC is nothing but ultimately the total deductions applicable subtracted from the the total earnings of an employee.

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Kajal Sharma

Kajal Sharma is a Technology Enthusiast. Having completed her Bachelors in Technology, she keeps abreast of the latest engineering trends. She has an enriching experience of nearly 7 years in Technical Content Development and Content Marketing. Besides believing writing to be the strongest form of expression, she finds solace in music and can hum a few bars herself!

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