Introduction to 24 LPA and CTC

When discussing job packages, especially in the context of the Indian job market, terms like 24 LPA and CTC (Cost to Company) are often used. In this article, we will delve into the meaning of 24 LPA, how it translates into a monthly salary, and the various components that make up the CTC. Additionally, we will explore in-hand salary and the factors that influence it.

What is 24 LPA?

Cost to Company (CTC) is the total cost that an employer incurs in employing an individual for a year. In simpler terms, 24 LPA (Lakhs Per Annum) means that the company is spending Rs. 24 Lakh on an employee annually. Let's break it down:

1 Lakh 100,000 24 LPA 2,400,000 Rupees per year Monthly Salary 2,400,000 / 12 200,000 Rupees (or 2 Lakhs)

In-hand Salary and Components of CTC

The in-hand salary is the amount an employee receives after all deductions and includes the gross salary minus various components like Provident Fund (PF), Gratuity, professional tax, and income tax. Let's explore these components in detail:

Lifetime Salary Package: 24 LPA

For a 24 LPA package, the typical in-hand salary would range from Rs. 1.4 to 1.5 Lakhs per month, depending on the individual's tax-saving plans and variable components in CTC. Here's a closer look:

In-hand Salary: Rs. 145,000/- PF Deductions: 12.5% from your side and 12.5% from the employer Gratuity: While this is not mandatory, companies often add it to the CTC, leading to deductions Medical Expenses: Medical insurance and its cost are also factored into the CTC, resulting in deductions from the in-hand salary

Calculating the Net Take Home Pay

The net take-home pay is calculated as the gross salary minus several components:

Provident Fund contributions (12.5% from employee and 12.5% from employer) Gratuity (if applicable) Professional taxes Income tax Variations in tax-saving plans and other variable components of the CTC

Example Calculation

Assuming the CTC remains constant, let's break down the monthly salary for a 24 LPA package:

Gross Salary: Rs. 200,000 (2 Lakhs) PF Deductions: 25% (Rs. 50,000) Gratuity (if applicable): Rs. 20,000 (depends on employment tenure) Professional Tax: Rs. 5,000 Income Tax: Assuming 20% on Rs. 200,000 Rs. 40,000

Total Deductions: Rs. 15,000 (PF) Rs. 20,000 (Gratuity) Rs. 5,000 (Professional Tax) Rs. 40,000 (Income Tax) Rs. 70,000

Net Take-home Pay: Rs. 200,000 - Rs. 70,000 Rs. 130,000 (or approximately Rs. 1.3 Lakhs)

Conclusion

In summary, 24 LPA means the company will spend Rs. 24 Lakh on an employee annually, but the in-hand salary after all deductions would typically range from Rs. 1.4 to 1.5 Lakhs per month. Understanding the various components of CTC and in-hand salary is crucial for job seekers to have realistic expectations and plan their finances accordingly.