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Cost to Company or CTC misleading term

Shitanshu Kapadia
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Cost to Company or CTC misleading term

CTC or Take Home

CTC or cost to company is often misleading term. Let me share with you recent incident. My friend got job in one very good MNC company. He got offer of 6 Lac as CTC (cost to company).  He was unable to control his happiness. He immediately joined this company. He got surprise after one month as his take home salary was very less compare to his CTC (cost to company).

This happens to many people today as people often get confused with Cost to company and Take home salary.

What is Cost to Company or CTC?

CTC is your cost to your company. Company spend money directly or indirectly on you apart from salary. So CTC is your monthly take home salary plus money spent on you by company.

Cost to Company = Monthly Salary + Additional amount spent by Company

In order to understand this in better way let us discuss what components make your CTC.

Also Read – Gratuity – Important Points to Know About the Gratuity

CTC (Cost to Company) Components

Before discussing your CTC components let us look at your salary components

  • Basic
  • Dearness Allowance
  • HRA
  • Conveyance Allowance
  • Education Allowance
  • Performance pay
  • Bonus
  • Medical Allowance
  • Washing Allowance
  • Telephone or Mobile Allowance
  • Leave Travel Allowance

All above component are part of your take home salary and CTC also. In other words total of all this components will make your salary.

Example

Let’s understand this using one example. Say your basic is Rs. 20,000 per month and DA is Rs. 6000 per month. Conveyance allowance is Rs.1000 per month and you are getting HRA of Rs. 7000 per month. So your overall salary package is 4.08 Lac per year.

Now let’s discuss about CTC components that actually inflate your CTC but may not be actually paid to you!

Bill Reimbursements

Bill reimbursement are part of your CTC package. This includes reimbursement of following:-

  • Telephone Bill
  • Medical Bills
  • Newspaper Bill
  • Magazine Subscription etc

Example

You are entitle to take medical bill reimbursement up to Rs. 20,000 per year. So, this Rs. 20,000 is considered as addition to your CTC.

Contribution to PF

It is mandatory to contribute PF 12% of your basic to provident fund (PF).  Contribution of your employer towards this is considered as addition to your CTC.

 This amount is not given to you every month but as company pay this money for you it is part of your CTC.

Example

12% of your basic is Rs. 2,400 per month.  So Rs. 28,800 per year is shown as additional amount to your CTC.

Gratuity

Gratuity is amount paid by company if you leave job after 5 years. Ideally Gratuity should not be part of your CTC but many company shows gratuity as part of CTC.

Health Insurance and Life Insurance

Some employer provides facility of free health insurance and life insurance to their employees and dependants. Premium amount which is paid by company on your behalf for this insurance can be included in your CTC package.

Transport Facilities

Companies may provide you free transport facility from your residence to work place. Cost of this free transport facility can be added in your CTC.

Canteen Food Facility

Companies may provide free or subsidies food facility to employees. Cost of this subsidy can be included in your CTC.

ESOP

Many company offers Employee Stock Option to employee. In this option company offers share at lower cost to employee. Many company add ESOP cost in CTC package.

Unrealistic or Fake Cost to Company Components

Let’s us look at some unrealistic CTC components. These components are unrealistic component which are not supposed to be added in CTC. But still some company does that.

Training Cost

Few companies offer good training to their employees as a part of joining but cost of this training they include in CTC which is wrong.

Office Phone Bill

Bill of office phone used by you can be included in your CTC.

Office Internet Connection Facility

Bill of Internet facility provided by company at office can be included in your CTC.

Office space rent

This is shocking it is found that many companies are adding office rent space in CTC.

Only Logic Company apply here is to show high CTC. So next time when you hear that someone from IIM got job with very high cost to company don’t be surprised, their large CTC may include many fake CTC component like office rent etc.

Hope I have cleared all your doubts related to HR Jargon Cost to Company.

Have you ever been to situation where company cheated you with fake CTC component?

Do share your experience with us!

21 Amazing Facts about Warren Buffett

Shitanshu Kapadia
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21 Amazing Facts about Warren Buffett

warren buffett

Warren Buffett is stock guru and most successful investor of 20th century. Today warren buffett is 3rd richest person of the world, yet he lives simple life without any luxury. Warren buffett converted dying textile mill “Berkshire Hathaway” to successful finance holding company. He is true inspiration for youth. So here is 21 amazing facts about Warren Buffett.

21 Amazing Facts about Warren Buffett

  1. Warren Buffett made first investment when he was only 11 years old & he feels that he has started late. Compare to warren buffett we don’t start investment at age of 21 year forget 11 year.
  2. Buffett started earning money at age of 6 year. He was selling pack of chewing gum.
  3. Buffett filled his first income tax return at 13 year to claim 35$. Many of us don’t know about income tax at age of 13 year.
  4. Buffett purchased small farm at the age of 14 years. He made enough saving by delivering newspaper.
  5. Warren Buffett was rejected by Havard Business School despite of his knowledge about stock market.
  6. Buffett converted Berkshire Hathaway in successful finance holding company. Today Berkshire Hathaway owns 63 companies.
  7. Warren Buffett given only two rules to CEO of these companies. Rule number 1: Do not lose any of your shareholder’s money. Rule number 2: Do not forget rule number 1.
  8. Buffett believes in simple living high thinking he does not carry even mobile with him.
  9. Buffett does not like to socialize with the high society crowd.
  10. Warren Buffett still lives in old home purchased half century ago.
  11. Warren Buffett drives his car on his own at age of 83 years.
  12. Warren Buffett decided to donate 85% of his wealth as charity.
  13. Warren Buffett hold private jet company but he never travel by private jet.
  14. Warren Buffett believes in Long term Investment strategy. He is investor and not trader.
  15. Warren Buffett net worth today is $63.3 billon which is greater than combine GDP of Ghana and Combodia for 2013.
  16. 99% of Buffett’s wealth was earned after his 50th birthday.
  17. Warren Buffett made on and average $37 million per day in 2013. If we divide it further he made $1.5 million per hour in 2013.
  18. Singapore based man bid $2.2 million in 2014 just to have lunch with Buffett.
  19. Berkshire Hathaway’s cash balance is at $50 billion enough to purchase 45 Airbus A318s.
  20. If you invested $1,000 in Berkshire Hathaway in 1970, that amount would be $4.86 million today.
  21. Buffett has so far donated enough money in his lifetime to build four Apple “Spaceship” Campuses.

10 Ways to Convert Black Money to White

Shitanshu Kapadia
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15
10 Ways to Convert Black Money to White

Converting black money to white is very common today.

People use all illegal methods to convert black money to white. This article is written to expose ways that people use to convert black money to white.  I do not encourage any taxpayers or anyone to use any of the below methods.

10 ways to convert black money to white

10 Ways to Convert Black Money to White

#1 Bogus Loan Entry

A popular method people use to convert black money to white is by showing bogus loan entries. Modus operandi, in this case, will be people give black money to friends or relatives and taking a cheque from them. This is a kind of bogus loan entry to convert black money to white.

In some cases, people give a repayment of this loan by giving back a cheque. People doing this must understand that the Income tax department is watching every transaction and tax payers have to prove the genuineness of every transaction.

#2 Formulation of Trust & doing Charity

Another popular way used by people to convert black money to white is by formulating trust for a social cause. They make executive bodies of own people in trust sometimes illiterate people like driver cook etc. They donate black money to this trust as charity to convert black money.

On paper it is charity but off the shelf, it is the conversion of black money to white.

#3 Showing Income as Agriculture Income

Another popular way of converting black money into white is by showing income as agricultural income. In order to show income as agricultural income you must possess the land and it must be used for agricultural purposes like plantation, garden nurseries etc.

However, there are various conditions you need to satisfy in order to claim agriculture income.

#4 Showing Cash Income from Profession

Another popular way to convert money to white is by showing income in cash. Income from tuition, professional fees, or commission is shown as cash by many taxpayers it is nothing but converting black money into white. 

#5 Sale of personal belonging like Jewelry

Go to a known jeweler and give him all the black money you want to convert. He will give you a cheque for the same amount. He will also give you a purchase bill showing you sold your personal Jewelry to him. In this way, your Black money is converted to white and you need not pay capital gain tax even.

#6 Converting Black money by Investment

Another method people use to convert black money to white is by making investments in cash.

People purchase an insurance policy and pay premiums in cash. For example, if the insurance premium is 50000 Rs/- payable quarterly than people pay the first premium via cheque and rest of all premiums in cash. This is the most simple and popular way to convert money to white.

#7 Getting Black money as a gift

Another popular way to convert black money to white is by getting gifts from relatives. Modus operandi is simple you have black money and your relative has the same amount of white money. Your relative issues a cheque to you as a gift and you will give your black money to him/her.

#8 Depositing Black Money on the name of Family members

Another popular method for converting black money to white is to open a bank account on each and every individual family member. Deposit black money in the name of every family member to convert it in white.

#9 By Real Estate

Real estate is a sector where the majority of black money is parked. People use real estate deals to convert black money to white. It is observed that people do fake real estate deals exchange money and cancel these deals due to non-payment of money.

#10 By Declaring Black Money

The best method for converting black money to white as per me is by declaring this money to IT authorities and paying tax on this money to convert it to white.

Disclaimer –

I don’t recommend readers to follow any of these methods for black money conversion. This article is just for exposing loopholes in our system. So, RBI and the government can take appropriate action by formulating strict rules to remove black money from India. I am against black money and black money generation ideas.

If you have any information about people holding black money and trying to launder it. Please send an email to blackmoneyinfo@incometax.gov.in This email id will be monitored by a special cell and immediate action will be taken on information sent by you.

Let’s help the government to fight against black money and tax evaders.

If I have missed any other methods which people use to convert their black money into white money I request you to share them with our team.

Let’s fight against black money and corruption.

If you are true Indian and against Black Money and corruption share this post on Facebook and Twitter. Show your love and devotion to our Nation India.

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