First Salary: Get the Best Out of Your CTC

Joining a company as a fresh graduate can be overwhelming; reading the offer letter makes one feel finally like an adult. However, the lack of experience can be a hindrance in understanding what exactly the offer letter says. Companies often provide Cost To Company (CTC) to recruits, much more than the actual in-hand amount. This article highlights a few things to look out for before negotiating the salary. 

Research the market

Go through many sources to know what the market and industry standards are for roles similar to yours. A good practice is talking to people in the industry, seniors from your institution, and sites that give out analytics for similar positions.

Understand the difference between CTC and take-home salary

CTC is the gross salary, and the take-home salary component is the net salary. Net salary means the salary quoted after deducting income tax, provident fund and professional tax, which is why it is also called in-hand salary. Know the value of the skills you provide to the organisation and your expenditure on essentials like food, rent, electricity, etc., while assessing whether the take-home salary is sufficient. 

Focus on basic salary component

Negotiate such that the basic salary component is the highest amongst all the other components. It increases the contribution for provident fund and gratuity, which will be beneficial for saving for retirement.  

Lastly, read, and ask about the other components thoroughly. Variable components often make the CTC look very attractive. Bonuses, for example, might be included only once in the salary but might make the initial offer too good to pass. 

For any clarifications/feedback on the topic, please contact the writer at jyotsna.singh@cleartax.in