The Cost to Company (CTC) is the amount that an employer expends on hiring the service of a team member. The CTC includes all the elements of a salary structure - Basic Salary, House Rent Allowance (HRA), Basic Allowance, Travel Allowance, Medical, Communication, Provident Fund, Pension Fund, etc., incentives or variables pay. CTC and take-home salary vary as CTC represents direct, indirect, and savings contributions.
Direct benefits may include basic salary, conveyance, medical, house rent, communication, etc.
Indirect benefits include food coupons, income tax savings, subsidized meals, etc.
Savings contributions include - Superannuation Benefits, Employee Provident Funds, Gratuity, etc.
Subtract taxes, gratuity, employee provident fund (EPF), and other deductions from Cost to Company (CTC); the amount you get is your Gross Salary. You earn the amount before deducting income taxes and other deductions such as bonuses, overtime pay, holiday pay, etc.
Your basic salary is one of the components of your salary and is mentioned in the salary breakup/structure. For India, the basic wage is one of many salary components. For others, typically, the basic salary is the salary itself.
Net Salary or Take Home Salary
As the name suggests, take-home salary is the monthly amount credited to your salary account. The employer gives it after deducting taxes and other deductions such as public provident fund, professional tax subtraction, etc.
Gross pay or salary is the money you receive before any taxes and deductions are taken out.
Employee pre-tax deductions such as health insurance are subtracted from gross pay. Then, federal, state, and local taxes are calculated, depending on where you worked. After taxes are calculated, post-tax deductions such as garnishments are subtracted, and reimbursable expenses are added.
To compute net pay, subtract voluntary and mandatory deductions and taxes from gross salary.