Indian take-home salary breakdown
When a company in India extends a job offer, they almost always state the salary in terms of Cost to Company (CTC).
Many new graduates simply divide their CTC by 12 and expect that exact number to hit their bank account every month. They are usually shocked on their first payday.
CTC is literally the total amount of money the company spends to keep you employed. It includes things that you never actually see in your bank account:
The biggest shock comes from EPF (Employee Provident Fund). The rules require a 12% contribution from the employer (which is in your CTC) AND a matching 12% contribution from the employee (which is deducted directly from your Gross Salary).
This means a total of 24% of your basic salary is locked away in a retirement account before it ever reaches your pocket. After accounting for EPF, Professional Tax, and Income Tax (TDS), your actual Take-Home Pay is often only 70% to 80% of your advertised CTC.
Why is Gratuity included in your CTC even if you might not receive it?
