CTC vs Gross Salary: Difference and Comparison

The salary is the income that a person earns when he provides any kind of service to a company or enterprise. The salary can be annual or monthly.

The person also gets many other advantages for his services. These services can be in any form.

Key Takeaways

  1. CTC includes all components of an employee’s compensation, while gross salary is the amount before deductions.
  2. Employers use CTC for budgeting and planning, whereas employees focus on gross salaries for their take-home pay.
  3. Benefits, bonuses, and allowances form part of CTC but may not be included in gross salary.

CTC vs Gross Salary

CTC (Cost to Company) salary is the total cost of hiring an employee, including salary, benefits, bonuses, and other expenses. Gross salary is the total amount of money an employee earns before deductions, including base salary, bonuses, overtime pay, and other forms of compensation.

CTC vs Gross Salary

Business Quiz

Test your knowledge about topics related to business

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What is an Economic Activity?

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Importing goods for the purpose of re-export is termed as ___________.

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Small scale firms are ____________ flexible in their functioning.

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Office is a place where ___________.

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In order to gain a competitive edge on the competition, some companies focus on:

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Who is not entitled to the share of profits?

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The return of shares to the company is known as ___________.

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The CTC is the money spent by the company n the employee monthly and is just like a saving which is later provided to the employee as savings and the old age income called pension.

This money is also used for the health insurance of the employee.

The gross salary is a benefit provided to the employee along with the basic salary. It includes many benefits like bonuses, vacations, and many more, which vary from company to company.

The gross salary is just provided annually and not monthly.

Comparison Table

Parameters of ComparisonCTCGross Salary
Full formCost to CostGross Salary
DefinitionThe CTC is the benefits that are provided by the company to the hired employee monthly as EPF, ESI, and House allowance.The gross salary is like a gift that is provided by the company to the hired employee annually as vacations and festival bonuses.
Benefits IncludedThe CTC includes a House Rent Allowance (HRA), Provident Fund, and Medical Insurance(ESI).The gross salary includes a bonus and vacation allowance.
Providing PolicesThe CTC is provided monthly. Some benefits are provided with the basic salary and funds like ESI and EPF are saved and used by the employee later.The gross salary is provided annually. The gross salary is provided without deducting the GST.
ESI and EPF The CTC includes ESI and EPF.The Gross salary includes bonuses, holiday pay, and overtime pay.
FormulaCTC is equal to the sum of Direct benefits, indirect benefits, and Savings Contributions.Gross Salary is equal to the sum of overtime pay, overtime pay, and festival bonus.
ExampleThe employee has a basic salary of Rs.20,000 and the company provides Rs.10,000 as HRA and the company provides Rs.2000 as ESI and EPF. Therefore, the CTC of the employee becomes Rs. Rs.32,000. The employee has a basic salary of Rs.20,000 and the company provides Rs.10,000 as a bonus along with the basic salary. Therefore, the gross salary provided to that employee that month is Rs.30,000.

What is CTC?

The CTC stands for the cost to cost and contributes to the House Rent Allowance, EPF, and ESI.

The EPF is the savings that are returned half as a whole sum of money to the employee when he retires, and the half is paid as a pension, to the employee, and he can also withdraw that money.

The CTC is the money that is deducted monthly, half from the salary of the employee and half given by the company.

The agreement says that a person can withdraw this money only after working for ten years in that company. 

The CTC has great benefits to the employee as this fund later comes as savings to the employee.

The lump-sum money has proved to be a great source for the employee, and the half fund can be used as a pension by the employee, allowing them to support themselves financially during old age.

Suppose the employee dies accidentally or for any other reason. In that case, this money is provided to his family, which helps to sustain after the death of their employee because some households have only one source of income.

What is Gross Salary?

The gross salary is the gift that the company provides to their employee. The gross salary is provided annually to the employee.

The gross salary includes a bonus for festivals, vacations, etc. The gross salary can also be called allowance. 

The gross salary doesn’t include the EPF and ESI. The company provides them except for the CTC. Every company has different policies regarding gross salaries.

Every company provides an allowance in different ways.

Gross salary is the benefit provided during the employee’s job time.

Money helps the employee to travel if a company provides holiday packs and on festivals this allows the employee to spend a little more and make the festivals a little brighter.

gross salary

Main Differences Between the CTC and Gross Salary

  1. The CTC stands for the Cost to cost, which is provided monthly, whereas gross salary is provided annually.
  2. The CTC is of two types, direct and indirect, whereas gross salary is only of direct form.
  3. The CTC contributes to the EPF, HRA, and ESI, while the gross salary doesn’t.
  4. The CTC includes the taxes deduction, while in gross salary, the tax deduction is not applied.
  5. The CTC is the money the company pays its employees monthly. Gross salaries are annual. They are paid at festivals or any occasion.
  6. The employee can withdraw the CTC Provident Fund after a certain amount of time has passed, but this is not the case with the gross salary.
  7. The CTC includes all the direct and indirect funds along with savings, while gross salary includes HRA, Bonus, and Holiday packs.
  8. The CTC comes under Article 17 and has the same policies in every company, but in the case of gross salary, every company follows different policies.
  1. http://dspace.vnbrims.org:13000/jspui/bitstream/123456789/3382/1/TLP%20for%20Compensation%20%26%20Benefits%202014-2016.pdf

Last Updated : 13 July, 2023

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