Suhaan Gupta and Aryan Chowdhury, both top engineering graduates, landed similar roles in the same industry. While Gupta got a Rs.36 lakh annual package, Chowdhury got Rs.24 lakh per annum. Naturally, Gupta expected a much higher take-home salary. However, a year later, he discovered that the difference between his and Chowdhury’s was only Rs.1 lakh. He wants to know how this is possible despite a 25% gap in their pay packages?
At the time of placement, the salary package of Suhaan Gupta must have been quoted as cost to company (CTC). As the name suggests, reflects the total amount a company spends on an employee, not just the cash component of the salary. It includes benefits like the employer’s contribution to the , insurance premiums, and other perks. This often inflates the package on paper, creating a mismatch between the quoted figure and the actual in-hand salary.
In Gupta’s case, his Rs.36 lakh CTC possibly included non-cash components, such as the employer’s share of the EPF, life and health insurance premiums, interest subsidies on loans, food coupons and transport allowance. Additionally, a one-time payment, like the joining bonus and performance-linked variable pay, may have been factored in. The variable pay depends on job performance and may vary each year. As a result, despite a higher CTC, Gupta’s take-home salary isn’t significantly more than that of Aryan Chowdhury.