CTC vs Take Home Salary

By S.Jagan Reddy – Noticeperiod.com

Often we come across situations where in a recruiter and a job seeker discuss and negotiate about the salary component before releasing the offer letter by the company.

The conversation goes as follows …

Job seeker :  Sir I need 40k as salary every month

Recruiter :  We will pay you 6 lacs per annum as CTC

Job seeker :  No.. no… I need 40k as take home, I don’t care about CTC

Recruiter :  Sir 6 lacs per annum is equal to 50k per month after deductions you will get close to 43 K per month

Job seeker  :  Oh is it!! Then I am accepting 6 lacs per annum as CTC please release the offer letter.

What is CTC :

Cost to Company (CTC) is a term for the total salary package of an employee, used in countries such as India and South Africa. It indicates the total amount of expenses an employer (organization) spends on an employee during one year.

More details about CTC vs Take Home Salary :

It’s important for the job seeker to understand the components of the CTC which is nothing but cost to the company. CTC will never be equal to the take home salary because it includes deductions.

In the above conversation I don’t see anything wrong the way the job seeker is asking, the reason being that the companies do add lot of components to the CTC, and that varies from company to company.

It’s always good to ask the recruiter about the components which are included in the CTC,  if the recruiter can provide the breakup of the components of the CTC to the job seeker.,  it will be easy for the job seeker to have a look at the components and the deductions and can come to a conclusion on the net take home pay what is going to get.

Sometimes the CTC looks good and attractive but when it comes to the net take home pay that will not be as good as the CTC is promised due to too many deductions. In such situations the job seeker will end up in a disappointment after seeing the net take home as his first salary. In these kind of situations the job seeker will not be happy to perform and will look for alternatives to fill up the gap of the deficient net take home. So he end up in resigning the job and looking for a new job.

Recruiters  also need to play a great role in explaining the components of the CTC and the deductions which will be carried on the CTCs so that the job seekers will be clear about their net take home salary and to avoid further embarrassing situations.

The companies and the recruiters take a lot of time and effort in identifying a job seeker for filling an open position, but many a times they don’t define the clear cut  roles and responsibilities to the job seeker and also things like CTCs which can harm the hiring process of a potential job seeker.

Well defined roles, responsibilities, CTCs, deductions and  net take home salary is important. these are few things which the recruiter has to inform to the job seeker before releasing the offer letter to avoid ambiguity and to have a long lasting relationship between a job seeker and a company.

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