CTC breakup structure template for India

LiveRec EditorialUpdated

Indian central rules as of 31 October 2026.

A CTC breakup structure splits the annual cost to company into basic pay, allowances, employer contributions such as provident fund, gratuity and variable pay. Under the Labour Codes, the definition of wages means basic pay plus dearness allowance plus retaining allowance, and allowances above 50% of total remuneration are added back, so basic pay can no longer be set very low. Use the template below.

At a glance

  • CTC (cost to company) is a yearly employer cost, not the amount that reaches the bank.
  • Design the structure so that the "wages" for statutory purposes are at least half of total remuneration.
  • Show every component, monthly and yearly, in the offer.
  • Never promise "in-hand" pay as a fixed figure. It depends on tax choices and deductions.

What does the 50% rule mean for the structure?

The Ministry of Labour's FAQs say the definition of "wages" under the Labour Codes took effect on 21 November 2025. If the listed allowances and payments exceed 50% of total remuneration, the excess is added back to wages. The Ministry says that only statutory components such as the employer's PF and pension contribution and statutory bonus count toward remuneration for this calculation, while gratuity, ESI and other retirement benefits do not. Overtime allowance forms part of the test.

Why it matters: PF contributions, gratuity and other benefits are computed on wages, so a lower basic pay no longer reduces them below half of remuneration. Read the 50% rule and how take-home pay can change.

CTC breakup structure (copy and paste)

Component                          Per annum (Rs)   Per month (Rs)   Notes
A. Fixed pay
 1. Basic pay                      [amount]         [amount]         Target at least 50% of total remuneration
 2. House rent allowance (HRA)     [amount]         [amount]
 3. Special / flexible allowance   [balancing]      [balancing]
 4. Other allowances [if any]      [amount]         [amount]         e.g. conveyance, LTA
B. Employer contributions
 5. Employer PF contribution       [amount]         [amount]         As per PF rules
 6. Employer ESI [if applicable]   [amount]         [amount]
 7. Gratuity provision             [amount]         [amount]         Accrual, paid on exit if eligible
C. Variable pay
 8. Performance pay / bonus        [amount]         [--]             Criteria, timing, discretion
D. Total CTC (A + B + C)           [total]

Worked example (illustrative, our own numbers)

Take a fixed monthly remuneration of Rs 70,000, leaving employer contributions and variable pay aside. If basic pay is Rs 25,000 and allowances are Rs 45,000, half of Rs 70,000 is Rs 35,000, so Rs 10,000 is added back and statutory wages become Rs 35,000. If basic pay is Rs 50,000 and allowances are Rs 20,000, no add-back is needed and wages stay at Rs 50,000.

This example is only to show the idea of the rule. The exact base for each calculation (which items count, what the employer PF contribution is based on, and any state rules) is in the sources. Have your payroll provider or counsel check the structure.

How do you explain CTC to a candidate?

Give three numbers in the offer: the yearly CTC, the monthly fixed pay before deductions, and the variable pay with its conditions. Add one line: "Take-home pay depends on your tax regime choice, PF contribution and professional tax." The candidate-side walkthrough is CTC vs in-hand salary.

What do employers usually get wrong?

  • Showing gratuity and employer PF in CTC without saying they are not paid monthly.
  • Listing variable pay as if guaranteed.
  • Using a very low basic pay to shrink PF, which the new wage definition limits.
  • Changing the structure after the offer without the employee's written agreement.
  • Forgetting that wages must be paid within the prescribed timelines (for a monthly wage period, before the expiry of the seventh day of the next month, per the Ministry's handbook) and that wage slips must be issued.

Frequently asked questions

What share of CTC should basic pay be? Aim for a basic that keeps wages at or above half of total remuneration. Your payroll provider can confirm the exact test for your case.

Is gratuity part of CTC? It is shown as a provision in many CTC structures. It is paid on exit if the employee is eligible. See gratuity under the labour codes.

Is employer PF in CTC? In most structures, yes. It goes to the employee's PF account, not into the bank account monthly.

Can I change the structure for existing staff? Only with proper notice and consent. Ask counsel.

Next step: drop this table into the annexure of your offer letter.

Sources

See front matter. Accessed 31 October 2026.

This is general information, not legal, tax or immigration advice. Rules change and your situation may differ. Consult a licensed attorney or qualified adviser.