Must Knows

What is gross salary and how is it different from CTC and take-home salary

[] Depending on many variables, your gross salary, take-home salary and cost to company (CTC) are all different.

Gross salary, cost to company and take-home salary, are not just different names for salaries. There is a lot of difference between these three, about which we would learn in this guide.

You are reading: What is gross salary and how is it different from CTC and take-home salary


CTC meaning

Cost to company (CTC) is the amount which a company will have to bear on an employee for a specific year. In other words, CTC indicates the cumulative amount a company spends on an employee in a year. Note that the company’s CTC will always be higher than your gross and take-home salaries as it has more components than gross salary or take-home salary.


Components of CTC

  • Basic salary
  • House rent allowance
  • Dearness allowance
  • Medical allowance
  • Entertainment allowance
  • Conveyance allowance
  • Other allowances
  • Allowance towards mobile, internet, utility bills
  • Educational allowance
  • Salary arrears
  • Remuneration
  • Overtime payment
  • Performance-lined bonus
  • Cash awards
  • Gratuity
  • Contributions towards Provident Fund (PF)
  • Payments of professional tax
  • Deductions as income tax

[] All about City Compensatory Allowance or CCA


CTC calculator

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CTC = Direct Benefits + Indirect Benefits + Savings Contributions 

Direct benefits Indirect benefits Savings
Basic wage Food coupons EPF
HTA Loans rated at subsidised rates Gratuity
LTA Company accommodation Superannuation benefits
Conveyance allowance Office space rent  
Medical allowance Company car  
Mobile allowance    
Special allowance    


Gross salary meaning

Your gross salary is the amount before any deductions are made from it. It includes all components of your salary, barring pension fund contributions like EPF, gratuity, etc.

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Components of gross salary

  1. Basic salary
  2. House rent allowance
  3. Conveyance allowance
  4. Medical allowance
  5. Dearness allowance
  6. Special allowance
  7. Leave travel allowance
  8. Allowance towards mobile, internet, utility bills
  9. Educational allowance
  10. Salary arrears
  11. Remuneration
  12. Overtime payment
  13. Performance-lined bonus
  14. Cash awards

Also read: Salary slip format: Everything you need to know


Gross salary calculator

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Gross Salary = Basic Salary + HRA + other allowances


Take-home salary meaning

Your take-home salary or net salary is the amount that gets credited into your account, once tax is deducted and contributions towards savings like PF and gratuity are made. As a result, it is much lower than your CTC or gross salary.


Take-home salary calculator

Take-home salary = Gross Salary – Income Tax – Public Provident Fund – Professional Tax


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Category: Must Knows

Debora Berti

Università degli Studi di Firenze, IT

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