While business owners in many other countries may use terms like “gross salary” and “net salary” when referring to an employee’s salary, “cost to company” or CTC is the most common term used in India. This term includes the direct and indirect costs associated with paying an employee. Business owners can consider the full cost of employment when considering whether to hire new staff or outsource workers.
What Is Gross Salary?
Gross salary is the amount of compensation an employee receives before any tax or deductions are taken from the amount. However, this direct cost does not fully encompass all of the costs that an employer will pay for an employee. Therefore, the CTC India is a better metric to determine the complete cost of employment.
What Goes into the CTC in India?
The CTC in India consists of many different expenses. However, each situation is different, so some expenses may be incurred in some situations and not in others. The costs that go into the CTC include:
Direct benefits are paid to the employee or on his or her behalf. They include:
Most of the other expenses that make up CTC in India include indirect costs of paying an employee.
The final category of expenses that make up CTC in India include employee retirement saving contributions paid by the employer, including:
Expand into India with Professional Help
As you can see, there are many expenses that go into the cost to company in India. The experts at Horizons can discuss your obligations as an employer. We also offer a flexible India PEO – employer of record and staffing option that allows you to delegate the employer of record obligations to us while having day-to-day control over your workers.
We can help you expand your company into India and keep you advised of the latest changes in the law. Contact us today to learn more.