Salary Slip Format Download
Get to know more about salary slip, the various components in a salary slip and its official format directly from experts. Know about the advantages as well.
Salary Slip - An Overview
A Salary slip or pay slip is given to an employee by their employer. It has a detailed breakdown of all the employee's primary income components, including the House Rent Allowance (HRA), Leave Travel Allowance (LTA), bonuses received, etc., as well as deductions for a month. In short, a slip is proof for your salary and a report containing all the components of your salary.
The salary slips are mailed directly to the employees. Employees must procure their salary slips on a regular basis as proof of salary payments and deductions, as required by law. Smaller companies may not frequently send salary slips, in which case an employee may ask their employer for a salary certificate as an alternative.
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Crucial Information on The Salary Slip
As per the employer, salary slips have different formats. The basic salary slip form, however, contains the following details:
It definitely has the company name, address, logo, and the month and year of the payment remitted
Employee PAN, Aadhaar, and bank account details, as well as the employee's name, code, classification, and department
It has the Universal Account Number (UAN)
Days total and holidays taken
A breakdown of revenue (income) and deductions
Amount of net compensation in numbers and words.
Advantages of Having a Salary Slip
Provides Access to Various Facilities
Employees have access to a number of free or heavily discounted government services, including health care, subsidised food, etc., through their salary slip.
Basis for Paying Income Tax
The salary slip acts as the basis for calibration of income tax . It aids in the preparation of Income Tax Returns (ITR) and helps to establish how much tax is owed or how much of a rebate the employee is entitled to for the year.
Aids in Borrowing
Salary slips ensure lenders that their loans will be paid back. When applying for loans, credit, mortgages, and other borrowings from banks and financial institutions, this document is crucial.
Aids in Evaluating Offers
On the basis of their prior salary slips, employees might get offers from prospective companies. It also aids in salary negotiations with prospective employers or for new positions.
Evidence of Employment
Salary statements are significant legal proof of employment. Frequently, applicants are asked to provide a copy of their salary slips as proof of employment and designation when applying for travel visas or admission to institutions.
Helps to Avail Loans
All of the information about a salary is contained on a salary slip . It serves as a formal declaration of the borrower's capacity to pay back the loan within the time period specified. It is useful to evaluate the worker's financial standing before granting a loan. A wage slip is thus a document needed when requesting a loan or even a credit card. When providing loans, banks and lending organisations typically require the last two to three months' salary slips.
Banks usually value the creditworthiness of the borrower based on their payslips. When an employee takes out a loan, a fixed EMI is withdrawn each month from the employee's paycheck. Consequently, the salary slips aid in establishing a credit limit and serving as a useful asset while the loan is being given.
Parts of a Salary Slip
A conventional salary slip is divided into two different parts namely,the incomes and deductions.
Incomes
The wage slip's 'incomes' section includes the following sections:
Basic Salary
The most significant portion of pay, it often makes up between 35% and 40% of the total. It is the foundation for reasoning out a number of other payslip parts. The first item on the pay slip's earnings side is basic salary.
Dearness Allowance
It is a payment made to employees to reduce the impact of inflation. 30–40% of the basic wage is typical. Since Dearness Allowance (DA) is dependent on payment of living, it varies depending on where you live. DA is taxable since it is directed toward paying for income tax sources. It comes under the pay slip's earnings side immediately after the primary pay.
House Rent Allowance
It is a payment made to employees to cover their own housing expenses. The HRA is typically between 40% and 50% of the base pay and is determined by the location of the rental home. It's not always completely tax-exempt for employees to receive their entire HRA. The HRA is decide based on the following factors:
The amount accepted as HRA from the employer
Rent paid in whole less 10% of pay
40% of the basic wage for individuals residing in non-metropolitan areas and 50% of the basic salary for those in metro areas.
Leave Travel Allowance
Travel expenses for employees and their immediate families while on leave are paid for by the leave travel allowance. Actual travel expenses that the employer provides as part of a leave travel allowance (LTA) are excluded from income tax. To qualify for a deduction, you must provide proof of your travel expenses within a particular range.
Conveyance and Medical Allowance
A Transportation allowance is an income made to assist with the cost of transport from home to job and vice versa. Taxes are not applied to the transport allowance given by an employer up to a monthly maximum of ₹1,600 (or ₹19,200 yearly). A medical allowance is provided to offset the employee's medical costs. The sum gets taxable if it reaches ₹15,000 per year.
Performance Bonus and Special Allowance
Employees are frequently provided performance bonuses as a source of motivation. Employees receive special stipends to help with specific costs. These allowances differ from one business to another business and are taxable.
Additional Allowances
Employers may give employees additional allowances for a variety of reasons. Employers have the option of grouping these allowances under ‘other allowances’ or putting them under a different heading.
Employees Provident Fund (EPF)
With few exceptions, this is a mandatory contribution made by the employee to a PF account in their name. The EPF account obtains 12% of the employee's base income from the employer. The Section 80C of Income Tax Act does not charge an employee for the donations made to the EPF. For the employees' EPF/retirement fund, the employer also contributes in a similar way.
Professional Tax
Only a few Indian states have this tax, which is dependent on the employee's tax bracket. Each state has its unique set of rules and legislation that control the professional tax in that jurisdiction.
Tax Deductible at Source (TDS)
Employers deduct TDS from employee earnings on behalf of the income tax division as per the tax bracket under which their employees income occurs. All the other deliberations are also taken into account.
Cost to Company (CTC) as Compared to Gross Salary
The whole amount that a company spends on an employee is referred to as the Cost to Company (CTC). The CTC is made up of a number of different elements, including the HRA, special allowance, other allowances, EPF, professional tax, and other deductions. In contrast, a worker's gross salary is the amount they are paid before any deductions. Compensation and EPF are not included in the gross earnings. After deductions from the gross payment are made, an employee's net pay (net salary) is the amount they are paid.
For Instance You incur a ₹85,000 Cost To Company (CTC). You receive a bonus from your workplace of ₹40,000 for the fiscal year.
Your entire gross pay is ₹8,00,000 - ₹50,000 = ₹7,50,000. (the bonus is deducted from the Cost to firm)
The professional tax, which in Karnataka is ₹2,400 per year, is subtracted from the gross pay
The Employee Provident Fund (EPF) contributions made by both the company and you (the employee) are subtracted from your gross pay. EPF contributions are calculated based on a monthly salary cap of ₹15,000. It equals 12% of ₹15,000, which works out to ₹1,800 per month or ₹21,600 annually
A yearly deduction of ₹3,000 is also available for employee insurance
Professional tax + EPF (employee contribution) + EPF (employer contribution) + employee insurance = total deductions.
Total deductions = ₹2,400 + ₹21,600 + ₹3,000, which adds up to ₹48,600 annuallyTake-home pay (net) is gross pay - all deductions
Net (take-home) pay = ₹7,50,000 - ₹48,600 = ₹7,01,400 annually
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Frequently Asked Questions (FAQs)
Every month, the organisation sends payslips by email. Your salary slips for each month are available for download or printing. You can access the internal employee portal of your business or the company's payroll software to check your salary slips online.
Yes. The value of the handwritten pay slip is also considered equal to that of a digitally printed one. It is highly feasible to provide a document of handwritten payslips as documentation for job security when applying for bank loans.
Either an excel spreadsheet or pay slip software can be utilised to develop a salary slip for each of your workers. To calculate the net salary and develop the salary slips , employee data, such as revenue, deductions, EPF, bank details, etc., must be manually or automatically summed up to the excel spreadsheet.
The majority of banks will need the last two or three months' worth of salary slips. The salary slips serve as evidence of your income, which is used to sanction your loan. Additionally, it must be provided to the banks in order to obtain a mortgage or other types of borrowing.
The Dearness Allowance (DA), House Rent Allowance (HRA), Medical Allowance, and other parts of a monthly salary slip enable an employee to lessen their annual income tax. The tax administrations authorise businesses to arrange the employee salaries in such a way that, by including a number of allowances in their pay, the employees can lessen their tax burden.
