The Difference Between your CTC and your Take-Home

I have interacted with as well as heard of several officers who were promised a big CTC and ended up getting but a fraction of that amount in their bank account.

Terms defined:

1. CTC: This is an acronym for 'Cost to Company'. It literally means what your employment is costing the company you are working with or plan to work with. This could besides your salary and allowances also include mediclaim premiums and other benefits the company provides you but doesn't translate into any cash flow in your hands.
   
2. Take Home: This is that part or component of your CTC which you actually get in your hand or as good as getting in your hand (like a driver, house rent, petrol allowance, use of company car, etc.).

Different companies have different ways of computing an employees CTC and the break up of the same consists of different things like basic salary, HRA, medical allowance, lunch reimbursement (sodexo or other coupons), PF, etc. No company intentionally tries to give you a wrong picture. Policies differ widely from company to company. Due to inadequate knowledge officers sometimes don't check the pertinent details or get the correct picture.

Check your take-home salary after you receive an offer from a company. In case the company does not give you a break-up of the same, ask for it. Also, speak to someone you know in the corporate sector or write to me. Additionally, the take-home component can be increased by optimizing different aspects of the CTC and can make a big difference in the final figure. Be sure to do this.

A word of caution. Several companies, especially small ones provide a big cash component as part of their package but not in writing in their CTCs like a driver, rented apartment, fuel allowance, etc. This is to save taxes and other reasons. While this is certainly part of your take home and can make life quite comfortable please be careful of this practice. The next company you move to might not acknowledge that part of your salary and negotiate for a hike only on the component that is mentioned in writing in your offer/appointment letter.