Gross Salary Net Salary Difference : Are you an employer or are you an employee or are you a job seeker , whatever it is but you have to know about some of the basic concepts of salary. There are most of the employees they still don’t know the difference between gross salary, net salary and CTC (Cost To company). Knowing all these things are very important to start and keep your professional career.
Gross Salary Net Salary Difference and CTC
Gross Salary : This is the salary mentioned in your offer letter and appointment letter. Gross salary is the salary which any company offers to it’s employees, gross salary doesn’t include any deductions.
Net Salary : Net salary is the salary which employee gets in hand after deductions such as PF, ESI , PT and TDS etc from gross salary. Net salary is also known as take home salary.
Cost To Company (CTC) : Cost to company is the amount expended on an employee. It will include gross salary and the other benefits payed by company. Suppose if an employee gross salary is 20000 Rs, then along with that salary company needs to pay PF , ESI and other allowances. Then all these things will together call as CTC.
Gross Salary Net Salary Difference Explained With An Example
If an employee gross salary is 20000 Rs Then
Net Salary = 20000-(PF 1800 + ESI 350 + PT 150)= 17700 Rs
(PT varies from state to state)
Cost To Company = Gross Salary + 13.36% PF on Basic wage + 4.75% ESI On Gross Salary