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Indian salaries are structured differently from most countries. This guide explains how Omnivoo calculates each component of your salary from the annual CTC (Cost to Company).

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What Is CTC?

CTC (Cost to Company) is the total annual cost an employer spends on an employee. It includes:
  • Direct salary paid to the employee
  • Employer’s statutory contributions (PF, ESI)
  • Gratuity provision
  • Any other benefits
CTC is not the same as take-home salary. Your in-hand pay is typically 65-75% of CTC after deductions and employer contributions.

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CTC Breakdown

Here is how Omnivoo structures the salary for an employee on an annual CTC of ₹12,00,000 (₹1,00,000 a month), where the CTC figure is your total cost: Gross plus the employer’s own contributions lands exactly on the CTC figure, because that figure is what you entered. The PF wage ceiling rose from ₹15,000 to ₹25,000 from the September 2026 payroll, so from that month the same CTC carries ₹1,250 more employer PF and EDLI, and the gross is ₹95,914 instead of ₹97,152.
These numbers assume the employee is covered by provident fund, which happens only once Omnivoo’s Indian entity is registered for PF. Until then no PF or EDLI is taken out of a CTC, and the hire form and the offer letter show the gross payroll actually pays. An employee whose Basic plus DA exceeded the PF wage ceiling when they joined, and who has never been a PF member, is an excluded employee under the EPF Scheme and no PF is deducted. On the same ₹12,00,000 CTC their gross works out at ₹99,008 instead, because there is no employer PF or EDLI to carry.

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Key Components Explained

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Basic Salary (50% of gross)

Basic salary is the foundation of the salary structure. Omnivoo sets Basic at 50% of gross, with Dearness Allowance a further 20% of Basic, because:
  • PF contributions are calculated on Basic plus DA, not on gross
  • Gratuity is calculated on Basic plus DA (Payment of Gratuity Act 1972)
  • HRA tax exemption is linked to Basic plus DA
  • The Code on Wages 2019 requires Basic plus DA to be at least half of total remuneration, and this structure puts it at 60% of gross
  • A higher Basic means better retirement benefits for the employee

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HRA (House Rent Allowance)

HRA is a tax-advantaged allowance for employees paying rent:
  • Metro cities (Delhi, Mumbai, Chennai, Kolkata): 50% of Basic
  • Non-metro cities: 40% of Basic
Employees who pay rent can claim HRA exemption to reduce their taxable income under the old tax regime. See Investment Declarations for details.

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Special Allowance

Special Allowance is the balancing component that makes up the difference between CTC and all other components. It is fully taxable.

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Employer PF Contribution

The employer contributes 12% of Basic to the Provident Fund, split as:
  • EPF (Employee Provident Fund): 3.67% of Basic
  • EPS (Employee Pension Scheme): 8.33% of Basic + DA (capped at ₹25,000, ₹15,000 before September 2026)
EPS stops from the month the employee turns 58, and the full 12% goes to EPF. See Provident Fund for full details.

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Employer ESI Contribution

If the employee’s gross monthly salary is ₹21,000 or less, the employer contributes 3.25% of gross salary to ESI. Most employees above this threshold are not ESI-eligible. See ESI Insurance.

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Gratuity

Omnivoo provisions 1.67% of Basic plus DA each month for gratuity, per the Payment of Gratuity Act 1972. Gratuity is payable when an employee completes 5 years of continuous service, or upon termination/death.

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Gross Salary vs Net Salary

  • Gross salary = Basic + HRA + Special Allowance + other allowances (what appears on your payslip before deductions)
  • Net salary (take-home) = Gross salary - Employee PF - Employee ESI - TDS - Professional Tax

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For Employers: Understanding Total Cost

Your monthly invoice from Omnivoo includes:
  1. Employee CTC (prorated monthly)
  2. Omnivoo EOR fee
  3. Total payable = CTC + EOR fee
All statutory contributions are included in the CTC. There are no hidden costs.