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I HAVE never understood my payslip till date, says Avni Rustagi, a native of Punjab.

Avni, 25, moved to Bangalore four years back in the hope of turning her dream into

reality. In that order, she took up work as a designer with an Information Technologyfirm.

Avni pays Rs 10,000 as rent for a spacious apartment, but ask her about how she managesher other expenses and she throws her hands up in the air. Numbers scare me, she

admits. I dont know a thing about finances.

She says, For instance, I dont even understand my pay structure or CTC as it is called,

what I get in hand or why I get that much.

Wealth realised that Avnis dilemma is a common problem with most working people.The transformation from CTC to take home leaves mostly everyone confused. Lets

decode and understand what happens when CTC becomes take home.

What is CTC?CTC is nothing but the cost that the company incurs to employ you and keep you

employed. It includes your pay and anything else that the company may incur to keep youin employment. Here is Avnis CTC or Cost to Company.

Avnis salary package is quite transparent.

However, each company has its own methodof calculating CTC. Companies may offer an

attractive CTC pay structure but the take

home may be substantially lower. Here are

some components that are commonly used inthe CTC:

1. IT companies often add training costs inthe CTC. These costs are incurred by the

company for training the employees. So,

naturally these do not come in the form oftake home.

2. Banks include interest subsidies in CTC.

That is, if you are a bank employee, you areentitled to a discounted rate on loans.

3. Performance bonuses are also included in

the CTC. These are variable components and

you will be paid out a percentage of thebonus depending on your performance.4. Companies may include the cost of group medical or life insurance. Some companies

may add food subsidies, that is, you may be getting a subsidy on your lunch in the officecanteen.

5. Some companies include gratuity in the CTC. Gratuity is a sort of bonus that is paid

Particulars Rs (per annum)

Basic 480,000

Dearness Allowance 48,000

Entertainment Allowance 12,000

House Rent Allowance 96,000

Conveyance Allowance 12,000

Overtime Allowance 12,000

Medical reimbursement 15,000

Gross salary 675,000

Companys contributionto provident fund

57,600

Annual CTC 732,600

Monthly CTC 61050

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out when you resign or retire from your company. The catch: You are entitled to gratuity

only after completing 5 years in the company.