Cost to Company (CTC)
Cost to company is the total annual cost of employing someone: gross salary plus the employer's own statutory contributions, festival expense, and any benefit the company funds. It is always higher than gross, and higher again than net pay.
Also called: CTC, total employment cost, employer cost
What goes into it
- Gross salary: basic plus allowances, for twelve months.
- The employer's statutory contribution share, assessed on basic.
- Festival expense: one month's basic per year.
- Any employer-funded benefit: insurance, transport, meals.
Why quoting CTC in an offer letter causes friction
CTC is a budgeting figure, not a pay figure. An offer that leads with CTC gives a candidate a number they will never see in their account, and the gap between it and their first payslip is large enough to feel like a bait and switch even when nothing was hidden.
Quoting gross, and showing the employer contribution separately if you want the candidate to see the full value, avoids the problem entirely.
Cost to Company (CTC), answered
No. CTC adds the employer's own contributions and funded benefits on top of gross, so it is always larger.
Take annual gross salary, add the employer's statutory contribution share on basic, add one month's basic for festival expense, and add the cost of any employer-funded benefit.
This page explains general practice in Nepal. It is not legal or tax advice, and statutory figures are revised from time to time. Check the current Act, rule or notice before acting on it.
Put it into practice
Related terms
- Gross Salaryकुल तलबGross salary is an employee's total earnings for a period before any deduction: basic salary plus every allowance, overtime and taxable benefit. It is the figure most offer letters quote and the one employees compare against.
- Net Payखुद तलबNet pay is the amount that actually reaches an employee's bank account: gross salary minus the retirement contribution, any voluntary CIT election, monthly TDS, and any other authorised deduction such as a salary advance.
- Social Security Fund (SSF)सामाजिक सुरक्षा कोषThe Social Security Fund is Nepal's contributory social security scheme. Employer and employee together deposit 31% of the employee's basic salary every month (11% from the employee, 20% from the employer), and that pool pays out medical, accident, dependent-family and old-age benefits.
- Festival Expenseचाडपर्व खर्चFestival expense is a statutory payment of one month's basic remuneration, made once a year at the festival the employee celebrates. It is the Nepali equivalent of a thirteenth-month salary, and it is an entitlement under the Labour Act 2074 rather than a discretionary bonus.
- Basic Salaryआधारभूत तलबBasic salary is the fixed core of an employee's pay, before allowances, overtime and bonuses. In Nepal it is also the base every statutory contribution is assessed on, which makes it the most consequential number in a salary structure.
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