CTC – As we see
When employers find promising candidates through successful interview rounds, these new hires often share their interview experiences with peers, offering tips for future interviews. However, they rarely disclose their exact salary. Instead, they mention their CTC, or "Cost to the Company."
CTC represents the total expense an employer incurs for an employee, but it includes various components like statutory deductions and taxes (TDS). As a result, the actual amount employees receive monthly (take-home pay) is often only 60-70% of the CTC.
Interestingly, both employees and employers prefer discussing CTC rather than take-home pay. Employees like to mention their CTC because it sounds more impressive, while employers find it convenient to highlight the comprehensive cost rather than just the salary. This practice, however, can be misleading, as it masks the real earnings of the employee.
Ideally, a more transparent term would be "take-home pay" for employees and "employee cost" for employers. Employees often brag about their “Cost to the Company” as an achievement, but many deductions are realized later or are not truly valuable. Similarly, what employers consider a "Cost to the Company”, they label as benefits for employees. It’s a funny world.
By CA L.Muralidharan and CPA L.Mukundan
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