You must have come across headlines flaunting salary numbers that could even make a successful entrepreneur feel envious. But, did you know that these eye-popping numbers often hide a harsh reality? This article will break down some pressing questions like: Do companies inflate CTCs? What strategies are used to show higher packages? What components should you focus on, and what should you ignore?
CTC Myth:
We’ve all been taught to aim for high salary packages. But nobody really teaches us how salaries work, and the things we should be looking at to get a higher package — not on paper, but in our bank accounts. So let’s start from the very basics.
You’ve probably seen the term “CTC” thrown around. But what is CTC? If you’re a college student who’s never worked before, understanding this concept can save you from future disappointments. So, CTC stands for Cost to Company — the total amount a company spends to employ you. But here’s where things get murky. When we see a number like Rs 1 crore, we divide it by 12 and assume that’s how much will come to our bank every month. But CTC is not the same as your in-hand salary.
“You may think companies advertise these huge CTCs to impress you and attract top talent, but there’s more to the story. A high CTC is not just for you to feel good about it — it also benefits the company, your college (if you’re fresh out of school), and your family. For the company, high CTCs make them look like attractive paymasters, which helps them hire the best talent. It boosts their reputation. For your parents, it brings bragging rights at social gatherings. And for your college or university, it becomes a powerful promotion strategy to show that they produce the highest-paying employees,” says Anubhav Shah, an HR consultant.
But, in the end, it’s a win-win for everyone except the employee who ends up disappointed when the real paycheck arrives, he adds.
Components of a CTC:
Let’s break down the components of a CTC, which can broadly be split into three categories: fixed components, variable components, and stock components.
- Fixed Components:
Basic Salary: This is the fixed portion that is usually around 50% of your CTC. It’s the amount you get before any tax deductions.
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