Definition
CTC vs Gross vs In-Hand Salary
CTC is the total cost a company bears for you, gross salary is your pay before deductions, and in-hand (net) salary is what actually reaches your bank after taxes and contributions.
CTC (Cost to Company) is the employer's total annual spend on you and includes components you never directly receive — like the employer's PF and gratuity contributions and certain benefits — on top of your salary. It is the largest, often misleading, headline number.
Gross salary is your pay before deductions, comprising basic, allowances and bonuses but excluding employer-only contributions. In-hand (net) salary is what credits to your account after subtracting income tax (TDS), your share of EPF, professional tax and any other deductions.
The gap between CTC and take-home can be significant, so when comparing offers, focus on net in-hand pay and the structure, not just the CTC figure.
Related terms
- Basic PayBasic pay is the fixed core component of your salary on which many other components and statutory contributions — like HRA, PF and gratuity — are calculated.
- EPF (Employer & Employee Split)The Employees' Provident Fund is a retirement savings scheme where both you and your employer contribute a percentage of basic pay each month, building a corpus that earns interest.
- Professional TaxProfessional tax is a small tax levied by some state governments on salaried employees and professionals, deducted from salary and capped at a low annual maximum.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.