Employee Salary Slip Format in India

“Please share your salary slip” is a phrase you hear often when joining a new company. These salary slips are proof for the HR professionals to know about your employment with your previous organization or sometimes to finalize a new CTC.

Frequently people don’t have their salary slips at hand. That’s not an issue, you can always ask your previous organization to share the salary slip, or either ask your bank for your bank statement.

To be on the safer side, you can always ask your organization to issue a monthly salary slip to save you any future hassles.

Salary slips are an important aspect but still, a majority of the population doesn’t understand the concept and how to attain one, and what salary slip format in India is followed.

Moving forward, through this blog we’ll put a spotlight on aspects such as – employee salary slips and employee salary slip format in India. Also the components of salary slips, and their importance.

Salary Slip – The Basic Concept

A salary slip or pay slip is a document an employee receives from their organization every month which comes under payroll management. The slip stipulates everything from gross salary, and deductions to the net amount that’s to be taken home. A salary slip is generated as soon as your paycheck comes in.

The pay slip holds importance to every employee because it assists in preparing for the Income Tax Returns (ITR) and determining the amount of tax that is to be paid. Also, the amount of refund to be claimed by an employee for the year.

The Salary Slip Format in India

Employee salary slip format in India is generally the same in every organization. The most common salary slip format in India includes the following information: 

• • Name of the company

• • Logo of the company

• • Month and Year

• • Name of the employee

• • Designation and Department of employee

• • Date of joining

• • Employee’s ID number

• • PAN/Aadhaar number of employee

• • Employee’s bank name and account number

• • Provident Fund account number of employee

• • Number of leaves taken by the employee

• • Effective workdays of the employee

• • UAN (Universal Account Number)

• • Earnings and deductions

• • Gross and net pay

• • Signatures of both employee and employer

Components of a Salary Slip in India

You can easily generate an employee salary slip by making use of the salary slip sample given above. Moving on we’ll now put the light on the components of a salary slip. 

An employee salary slip generally consists the following components; 

A) Income

1. Basic Salary

The basic salary is the fixed part of an employee’s income which excludes the overtime pay, allowances, bonuses, or any other gratuity payments. It is usually fixed at 30-50% of the take-home salary and depends on the employee’s designation and the industry in they work.

2. Gross salary

It is the term used to describe the salary of an employee before tax or other deductions. Components such as bonuses, overtime pay, holiday pay, HRA, PF, professional tax, etc. are included in the gross salary. 

3. Net salary or take-home salary

As mentioned in the sample salary slip, net salary is the total salary an employee gets after tax, provident fund, and all the mandatory deductions are made from the total gross salary. 

B) Allowances  

An allowance is the additional amount paid to an employee above the basic pay as a part of the employee benefits. Mentioned below are some common types of allowances provided by an organization;

1. Conveyance Allowance (CA)

This allowance is offered to an employee to compensate the travel expenses to and from residence to workplace, travelling for office-related work, field trips, etc.

2. House Rent Allowance(HRA)

HRA is usually 40-50% of basic salary and is provided to employees to compensate for rented accommodation expenses. This component of a salary slip can be claimed as a tax deduction.

3. Dearness Allowance (DA)

DA is a living allowance offered to minimize the impact of inflation. This allowance is completely taxable and is only applicable to government employees, public servants, and pensioners.

4. Medical Allowance

It is a fixed allowance paid to employees on a monthly basis to compensate for expenses incurred on health. Medical allowances are fully taxable and must be paid irrespective of the medical bills submitted by the employees.

5. Performance Allowance

This allowance varies from organization to organization and is offered as a part of a company’s rewards and recognition program. Bonuses, appraisals, and incentives are all part of the performance allowance.

6. Other Allowances

Companies can pay special allowances to their employees as part of employee benefits. These allowances may include education allowance, outstation allowance, uniform allowance, etc. 

C) Deductions

Below are some of the major deductions that are a part of the salary slip components:

1. Tax Deducted at Source (TDS)

TDS is a specific amount of tax deducted every month from the salary of an employee and deposited to the Income Tax Department. The amount to be deducted depends on the age bracket and income of different individuals.

2. Employee Provident Fund (EPF)

It is one of the most common deductions in which both employee and employer contribute 12% of the employee’s basic salary and dearness allowance towards EPF.

3. Professional Tax

It is the minimal amount of tax deducted from an employee’s salary every month for making a payment to the state government. Professional tax varies from state to state and is not applicable in all states. Arunachal Pradesh, Goa, Haryana, Delhi, Himachal Pradesh, Uttar Pradesh, Jammu & Kashmir are some states that don’t charge professional tax. 

4. Life insurance and health insurance

As shown in the sample salary slip format of India, health insurance and life insurance are also a part of deductions that form components of a salary slip. This amount is deducted while calculating an employee’s take-home salary.

You can make your salary calculations using the below salary slip formulas: 

Particulars	Formulas
Taxable Income	Gross Salary – Deductions
CTC = Employee’s total salary package	Gross Salary + EPF + Gratuity + Others
Gross Salary	Basic Salary + HRA + Other Allowances
Net Salary	Basic Salary + HRA + Allowances – Income – Tax – EPF – Professional Tax

Importance of Salary Slips

Helps you understand tax deductions

Salary slips assists you in understanding the amount you’ll be paying as tax and the amount you’ll be getting in hand. This is an important piece of information as it helps you negotiate better when a person migrates to a new company.

Gives you an idea of your retirement saving

A thorough evaluation of the salary slip can help in figuring out the amount you will be able to save for retirement. An additional look at your EPF or PF accounts can help you plan better for your retirement. 

Background Checks

As much importance as it holds for an employee, it does for an employer too, as they can be a great assistance when you are hiring a new employee. Salary slips can be used to validate the salary claims made by a prospective employee. 

To avail of loans/ credit cards

As you can see in the employee salary slip format in India, your salary slip contains details of your monthly income. It is a major factor in determining your loan repayment potential or ability to meet your debt obligations. Thus, you are asked to submit a salary slip while applying for a credit card, loans, etc. 

Avail government subsidies

You can also use your salary slips to enjoy certain free services provided by the government such as medical care, food grains, etc. 

Conclusion

Wrapping up, we’re pretty sure you got a strong gist of what salary slips basically are.

Manual payroll processing is a tedious task in itself and issuing employee salary slips additionally can make the process more time-consuming and complicated.

The reason why all top-notch companies are opting for payroll software that makes it easy to run payroll without any errors and saves their quality time which they can invest in more productive tasks.

The payroll software generally has a predefined employee salary slip format that makes it easy for employers to generate and issue employee salary slips.

Moreover, employees can easily download their salary slips at any point in time from anywhere with just a touch of a button using their payroll software.