What Is Basic Salary, Gross Salary, Take-Home Salary and CTC ?

What Is Basic Salary, Gross Salary, Take-Home Salary and CTC ? We must have listened these words Basic salary, Gross salary, CTC etc. We work hard and earn money but 80% of us are not aware about actual meaning of these words. What kind of payments these are? What is difference and all. In this article, we will understand all these terms .

What Is Basic Salary


First we need to understand the word itself ‘salary’. Salary is amount which we get or a company pays us when we work for it. The payment is paid to the employees according to their work. If your post is good then you get good salary.

                         Apart from salary, companies provide various kind of perks to their employees such as House rent allowance for phone bills,TA-DA, Transportation allowance etc.

What is Basic Salary

Principal amount which is paid to an employee is called Basic Salary. Basic salary is given according to the post held by an individual. Another benefits such as bonus, over time or any arrear are not included in the basic salary. Increment is given on basic salary only. Suppose your basic salary is Rs 20000 and you get 5% increment then you will get Rs 1000 as increment and your basic will increase to Rs 21000.

What is Gross salary      

Gross Salary includes your basic pay and all other benefits like overtime, HRA, production allowance or any kind of bonus. It is imperative to know that Gross salary includes the salary on which tax is also deductible. Suppose your salary is Rs 40000 and Rs 2000 is tax deducted then your  Gross Salary is Rs 40000. Deducted tax Rs 2000 will be included in your Gross Salary.

What Is Basic Salary

What is Net Salary / Take Home Salary

Net salary is salary which you get after all the deductions. The salary which you get in your bank account is called Net Salary. Suppose your basic salary is Rs 15000, HRA is Rs 2000 and bonus is Rs 3000. Rs 2000 is tax deducted then your Gross salary becomes 15000 + 2000 + 3000 = 20000 but your Net Salary will be 20000 -2000(Tax Deducted)= Rs 18000,  so your Net salary becomes 18000.

What is CTC salary

First we need to know abbreviation of CTC. CTC means Cost to Company. This is kind of payment which is paid directly or indirectly to the employee. CTC includes Basic Pay, Bonus, Allowance which is also called Gross Salary and indirect payments like Medical insurance, Life Insurance, which are paid indirectly. In other words, CTC salary is direct and indirect salary. We would like to give one more example, suppose if your salary gives you home pick up and drop service in company bus or car and bears your lunch charges then it is also included in CTC. At the time of interview, if a company decides to pay you Rs 50000 CTC, it doesn’t mean you’ll get Rs 50000 in your bank account in the end of the month.

What Is Basic Salary

We will also try to illustrate with the very simple table, hope it’ll help you.

What Is Basic Salary


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