What is Payroll Cost to Company (CTC)?
When a company hires an employee in India, the actual cost of retaining that employee is always higher than the gross salary paid to them. This is because the government mandates several employer contributions toward the employee's social security.
Key Employer Payroll Taxes
- Employer Provident Fund (EPF): The employer must match the employee's 12% contribution. This 12% is calculated on the Basic Salary and is an out-of-pocket expense for the company.
- ESIC: For employees earning ₹21,000 or less, the employer must contribute 3.25% of the Gross Salary toward medical insurance.
- Gratuity: While gratuity is paid out only after 5 years of service, standard accounting practices require companies to provision for it monthly at a rate of 4.81% of the Basic Salary (15/26 days per year).
Our Payroll Calculator helps HR professionals, startup founders, and accountants accurately forecast the true cost of their workforce by automatically applying these statutory compliance rates.