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Salary Slip Format | Company Vakil

Salary Slip Format

Salary slip additionally regarded as a pay slip is furnished to personnel to file their month-to-month pay and allowances. It is a report that makes the personnel conscious of their incomes and deductions as it would differ from employee to employee. In this article, we look at a salary slip in element alongside with profits slip format.

Importance of Salary Slip

  • The revenue slips act as evidence of employment.
  • It proves that the business enterprise has permanently recruited an employee.
  • This is accessible in negotiating with new employers for a better pay.
  • Salary slips resource to apply for loans in banks.
  • It is an authentic proof of profits and used to file earnings tax returns.
  • It ensures that the PF and insurance deductions are true.

All employees have to receive payslips on a month-to-month foundation as it is the proof of his employment in a corporation and is required for a number of compliances submitting like income tax filing and PF return filing. If a worker has now not obtained it, he/she ought to talk with their payroll team to have it sent mechanically post payroll processing.

Computerized and Manual Salary Slip

Manual salary slips are old-fashioned now as most of us work in paperless workplaces and the pdf file of a profits slip is acquired on the date of the salary. Issuing manual profits slip may be time-consuming and would possibly eat a lot of paper. Computerized payroll consumes considerably lesser time. A hard copy of the Computerized payslip or the E-payslip used at the employee’s convenience. Lesser cost is incurred as it is automated. It secures the data, thereby keeping its confidentiality. Manual papers are usually issued to supply the original revenue slip with the company’s seal and signature of the licensed official.

The validity of a Salary Slip

Manual payslip and the e-payslip are lawful and valid proof documents. It had to be noted that an issued and approved payslip ought to no longer be manipulated or modified as it might be a criminal offense to edit a pay slip.

Components of a Salary Slip

Organizing salaries and processing payroll is an inevitable duty for each HR and payroll team. While developing the best revenue structure, we have to hold in the idea that the payslip ought to be tax efficient, reduce employer’s legal responsibility and need to be compliant with the minimum wages and PF Laws. The aspects are sub-divided into 2 sides which are as follows.

  • Income or earnings
  • Deductions

We seem into the various aspects of a revenue slip in the paragraphs below:


The payslip is divided into 2 sides, we file all types of incomes or beneficial properties or allowances on the left-hand-side of the payslip. Let su go through and identify the possible incomes noted on a payslip of an employee.

Basic Salary + Dearness Allowance

This is the high and essential aspect of a profits structure. It is the biggest issue comprising around 40% to 45% of the total salary. This is the foundation for calculation of a range of different components such as PF, gratuity, ESI etc. This issue is absolutely taxable.

Just as simple salary, dearness allowance too would have an effect on the profits components. It is to be referred to that each fundamental earnings and dearness allowance ought to neither be high nor be low. If high, it would directly imapct the tax liability of an employee. If low, it would be non-compliance of the state’s minimal wages rules.

House Rent Allowance

The House Rent Allowance, as the name suggests, is an allowance to pay out the residence rent of employees, which could be claimed in the year-end. The worker ought to get an exemption from income tax for HRA. HRA would be calculated generally at 50% of the Income Tax. Know greater about House Rent Allowance.

Conveyance Allowance

This has been in general brought for a worker to cover his prices from home to work and return, it is additionally exempt from profits tax to a positive amount. The most quantity that is tax deductible underneath this issue is Rs. 1,600 a year to Rs. 19,200 a year.

Leave Travel Allowance

Leave tour allowance (LTA) reimburses personnel for their travel at some stage in their leave, provided it is inside the confines of the country. This aspect is typically used via employers due to its tax emoluments. An employee should declare tax advantages for the fare expenses paid for his/her family when they take a holiday. However, there are restrictions to what you can declare as tax benefits:

  • Only the journey fare expenses can be claimed.
  • Stay and meals on your time out aren’t covered.
  • Travel needs to be within India.
  • Anon the spot household that is typically dependant on the worker are solely covered under LTA.

Medical Allowance

Medical allowance is a reimbursement for medical prices made by means of employees. This quantity is tax deductible up to Rs. 15,000 a year or Rs. 1,250 every month. In order to declare tax advantages underneath this component, personnel ought to put up proof of their scientific expenses.

In case the Rs. 1,250 isn’t claimed in one month, then this amount is carried ahead to the next month. This ability that a modern amount of Rs. 15,000 ought to be claimed at the giving up of the year. This is also the suggested quota that firms normally assign to this area of the revenue set-up.

Child Education Allowance

This payment is made towards tuition fees of employees’ children and is tax deductible for the quantity of about Rs. one hundred each month for most of two children. Hence, this sum is normally constant up to Rs. 2,400 annually.

Special Allowance

The unique allowance is the component normally used by way of companies as the residue of Cost to Company (CTC) when the relaxation of the elements have been paid out. This factor is entirely taxable and is also considered for the computation of Provident Fund


Deductions are facets of the revenue shape whereby parts of CTC are deducted from the take-home income of employees. We record all sorts of deductions on the right-hand-side of the payslip. Let’s examine the viable deductions recorded on a payslip of an employee.

Provident Fund

Provident Fund (PF) is calculated at 12% of Basic + Dearness Allowance + Special Allowance. The company and the employee each need to make an equal contribution of 6% each. This is relevant to organizations which have 20 + employees on their employment. If an employee’s Basic + DA + Special Allowance is much less than Rs. 15,000 then it is obligatory for Provident Fund to be deducted. Other employees incomes over Rs.15,000 can opt out via filling form eleven (In case this is the first employment and UAN has no longer been generated) or can pick to have PF deducted fixing the threshold at Rs. 15,000. For employees having UAN, the month-to-month minimal contribution would be Rs.1800.

Employees State Insurance

Deductions toward ESI are obligatory for employees whose gross earnings do not exceed Rs. 21,000. It is solely applicable in companies the place there are 20 or greater personnel within the Rs.21,000 gross revenue bracket. Employees have to make a contribution of 1.75% of the gross salary and employers have to make a contribution of 4.75% of the gross salary.

Professional Tax

Professional tax is the tax imposed by Governments on salaried employees. The states that have a bevy of expert tax are Karnataka, Bihar, West Bengal, Andhra Pradesh, Telangana, Maharashtra, Tamil Nadu, Gujarat, Assam, Chhattisgarh, Kerala, Meghalaya, Odisha, Tripura, Madhya Pradesh, and Sikkim. The amount of professional tax that is deducted differs from nation to state, wherever it is relevant


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