What is CTC? What Is The Difference Between CTC And In Hand Salary

A lot of people these days are switching to jobs that offer them CTC instead of an in-hand salary. But what does CTC actually stand for? How is it different from an in-hand salary? Is it really worth giving up your hard-earned money to switch to a job that pays you through CTC? 

We answer all these questions and more in this comprehensive post about CTC and in-hand salary in India.

1. What is CTC?

CTC stands for Cost to Company. It is the total cost of all benefits and reimbursements that a company pays to its employees. This amount includes basic salary, dearness allowance, house rent allowance, medical reimbursement, transport allowance, and any other special allowances. 

2. What Is The In-Hand Salary?

In-hand salary is the actual, physical amount of cash you receive in your hand each month. It’s the amount that’s left over after all deductions have been made, such as income tax, provident fund contribution, and insurance premiums. Your in-hand salary is the amount that you can use to pay your rent, utility bills, and other monthly expenses. In contrast, CTC stands for the cost to the company. It’s the total salary that your employer pays each month, including your basic pay, allowances, and any bonuses or commissions.

3. Components Of CTC

In India, CTC is usually composed of direct benefits, including basic salary, dearness, house rent, medical, vehicle, LTA, and CCA allowance. The components of CTC may vary depending on the company and the employee’s position. Some employers may also offer indirect benefits, including medical and life insurance, all income tax savings, and loans without any interest rate as part of the CTC. There are several different savings schemes that add value to CTC, including gratuity, funds of employees provident, and Superannuation benefits.

4. What Is The Gross Salary

A gross salary is defined as the total amount of salary that all employee receives from the company before deductions are made. It includes basic salary, allowances, dearness allowance, commission, bonus, and any other payments that are made to the employee. It’s the amount that’s actually paid out to the employee. 

5. Difference Between CTC And In Hand Salary

In India, there are two methods of salary calculation: CTC and in-hand salary. CTC, or cost to the company, is the total amount that the company spends on an employee in a year. This includes the base salary, allowances, bonuses, reimbursements, and other benefits. In-hand salary, on the other hand, is the amount that the employee actually receives in hand. It does not include any benefits or reimbursements that the employee may receive from the company. The main difference between CTC and in-hand salary is that CTC includes all benefits and allowances, while in-hand salary only includes the base salary.


There’s a lot of confusion about the difference between CTC and in-hand salary, but it’s actually quite simple. CTC stands for the cost to the company and is simply the total amount of money your company pays to keep you employed. In-hand salary, on the other hand, is the amount of money you actually receive in your bank account each month. Knowing the difference between CTC and in-hand salary is important for understanding your take-home pay and budgeting properly.

When it comes to financing, HRMS software will effectively assist employees and employers in splitting salaries to understand how individual wages are calculated and the reductions.

Payroll management services from Beehive can help your employees keep a continual eye on their accurate breakdown of payrolls. Visit the Beehive website https://beehivesoftware.in/ immediately to take advantage of the precise compensation breakdown, allowing you to keep your staff informed while maintaining complete transparency.


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