Quick answer: CTC (cost to company) is the total amount you spend on one employee in a year. It is gross salary plus your own employer-side costs: PF under the Code on Social Security, 2020, EDLI, PF admin charges and a gratuity provision. Indian offer letters quote CTC, so take-home pay always lands below CTC divided by 12.
- Employer PF is 12% of wages, or ₹3,000 a month at the ₹25,000 wage ceiling in force since 17 September 2026.
- Gratuity is usually provided at 4.81% of basic, which is simply 15 ÷ 26 ÷ 12.
- Since 21 November 2025, excluded allowances above half of total pay are added back to wages under the Code on Wages.
- On an ₹18 lakh CTC in Pune, the employee takes home about 86% of the package.
What sits inside an ₹18 lakh CTC?
Two layers. What the employee earns, and what you pay on top of it.
The table uses a Pune software engineer, with basic at 50% of gross, HRA at 50% of basic and employer PF on the ₹25,000 ceiling.
| Component | Yearly | Monthly |
|---|---|---|
| Basic salary | ₹8,59,821 | ₹71,652 |
| House rent allowance | ₹4,29,911 | ₹35,826 |
| Special allowance (balancing figure) | ₹4,29,911 | ₹35,826 |
| Gross salary | ₹17,19,643 | ₹1,43,304 |
| Employer PF (12% of ₹25,000) | ₹36,000 | ₹3,000 |
| EPF admin and EDLI (0.5% each) | ₹3,000 | ₹250 |
| Gratuity provision (4.81% of basic) | ₹41,357 | ₹3,446 |
| CTC | ₹18,00,000 | ₹1,50,000 |
The bottom four lines are your employer contribution layer, worth ₹80,357 a year. The employee never sees them as cash.
From gross salary, payroll then deducts employee PF of ₹36,000, Maharashtra professional tax of ₹2,500 and new-regime TDS of ₹1,34,086. That leaves a take-home salary of ₹15,47,057 a year, or ₹1,28,921 a month. Our salary calculator for India runs the same maths for other packages.
How did the 2025-26 rule changes reshape CTC?
They moved money from gross pay into statutory lines while the headline CTC stayed put.
First came the four codes, effective 21 November 2025 per PIB’s Labour Codes release, and from that day a thin basic padded with allowances stopped shrinking the statutory wage base. The 50% wage rule adds the excess back.
Then the EPF wage ceiling rose from ₹15,000 to ₹25,000 on 17 September 2026. For staff on ceiling-capped PF, employer PF went from ₹1,800 to ₹3,000 a month, and EPF admin and EDLI rose from ₹75 to ₹125 each. That is about ₹1,300 a month moved out of gross. Quietly.
KPMG’s note on the EPFO wage ceiling FAQs covers the mechanics.
So recheck every offer issued before September. The CTC is unchanged. The payslip is not.
What do foreign employers get wrong about CTC?
The usual error is treating CTC as base salary. Costly.
Let’s say you budget ₹18 lakh as US-style base pay, then write ₹18 lakh CTC in the offer. The candidate’s gross quietly drops by ₹80,357.
The reverse slip costs you money. CTC is the employee’s package. Your own cost runs higher.
Under an employer of record you still have to add the provider’s monthly fee, plus any laptop, insurance top-up or workspace you choose, to reach your fully loaded cost. Our guide to salary structure in India shows how each component is usually set.
How does Remunance price CTC for your India hires?
Remunance passes salary, employer PF, gratuity accrual and insurance through at cost. No mark-up.
On top sits a flat fee from USD 99 per employee per month, so the CTC you approve is the CTC the employee gets. You can model a role with our EOR cost calculator for India, or get a costed hiring plan for your first Pune hire.
What else do people ask about CTC?
What is the full form of CTC?
CTC stands for cost to company. It is the yearly figure Indian employers quote in offer letters, covering gross pay and employer-side costs such as PF and gratuity.
Is CTC the same as gross salary?
Not quite. Gross salary is what the employee earns before deductions. CTC adds employer PF, EPF admin, EDLI and the gratuity provision, about ₹80,357 more on an ₹18 lakh package.
How much of CTC is take-home in India?
About 86% on our Pune example. The share falls if you pay PF on full basic or if the employee moves into a higher tax slab.