CTC, and the number the employee actually receives
Cost to company is what the employer spends. Take-home is what lands in the account. The gap between them is where most offer-stage arguments come from.
What it is
Total annual cost to the employer: salary, employer contributions, benefits and bonus.
What it is not
Take-home. Employer contributions and the employee's own deductions and tax all sit between the two.
The trap
Quoting CTC in the offer and letting the candidate assume it is monthly salary ÷ 12.
CTC is the total annual cost an employer bears for an employee — salary, employer contributions, benefits and any bonus. It is not what the employee receives. Take-home is CTC minus employer contributions, employee deductions and tax.
How it works in practice
A ₹6,00,000 CTC typically breaks into basic, HRA and special allowance, plus the employer PF share and gratuity provision. The employee sees roughly ₹43,000–46,000 a month in hand after PF, professional tax and TDS.
What to watch for
Offers are argued about because CTC is quoted and take-home is expected. Show a candidate the split before they accept, not on their first payslip.
How Klok handles it
Klok computes CTC and take-home from the same salary structure, so the offer letter and the first payslip cannot disagree.
CTC (Cost to Company) FAQs
Why does take-home look so much lower than CTC?
Because CTC includes the employer PF share and the gratuity provision, which the employee never sees, and take-home is then further reduced by the employee's own PF, professional tax and TDS.
Should gratuity provision be shown in CTC?
Employers commonly do, and it is defensible as a genuine cost. It is also the component candidates find most misleading, because it is not payable until five years of service. If you include it, show it as a separate line.
How do we stop offer-stage disputes?
Show the candidate the full split — gross, deductions and estimated take-home — before they accept, rather than letting the first payslip do the explaining.
Why is take-home so much lower than CTC?
Because CTC includes employer PF, gratuity provision, insurance premium and similar — real costs to you that never reach the employee's bank account. The gap is structural, not a deduction error.
Should gratuity be shown in CTC?
It is legitimate as a cost view, but label it as an employer provision. An employee who reads it as available money will feel misled at their first payslip, and they are not entirely wrong.
Does a higher CTC always mean higher take-home?
No. Two identical CTCs with different structures produce different take-home and different statutory cost. That is exactly why the structure, not the headline, is what should be discussed at offer.
Stop calculating this by hand
Klok computes it from your own attendance and salary data, every month, with the working shown.