What is a Salary Slip?
A salary slip is a crucial document that contains the necessary details of your salary components along with employment details. Every month, an employer issues the salary slip to an employee. The salary slip or pay slip either is in the form of soft copy or printed hard copy. A salary slip contains some crucial details such as the company’s name, logo, and address.
Who gets a Salary Slip?
Working employees in a company get this monthly salary slip. It is the sole responsibility of an employer to issue a copy of salary pay slip to employees. Some small companies or start-up companies may not provide these employee pay details. In such a situation, you can ask an employer for a salary certificate. Most employers may provide electronic pay slips, and while some may issue hard copies.
Format of Salary Slip
Different companies follow different standard formats for pay slips. Here the list of details that the pay slips may contain the following details. The salary slip format includes the following details.
- Name of the company, logo, and address
- Date, month, and year of the Salary Slip
- Employee details like name, designation, code, and department
- Employee bank account number, PAN or Aadhar card number
- EPF Account Number
- UAN (Universal Account Number)
- Total number of working days, Number of leaves
- Earnings and deductions list
- Gross Pay and Net Pay
One can get the salary slip format word document or salary slip format in excel pdf, as per the company rules.
What are the Components of a Salary Slip?
An employee pay slip involves two major parts such as incomes and deductions.
- Basic Salary
The basic salary is a crucial part of the monthly pay slip, as it contains your 35% to 50% oat the total salary amount. The calculation of other salary components depends on the percentage of the basic pay. Thus, most companies try to give your lower amount of basic pay to avoid paying higher allowances. In general, basic pay is more for junior-level employees and less for senior-level employees.
Features of Basic Pay
- Basic pay amount applies to taxes, as a whole
- The Basic Pay is a part that you get as an in-hand salary
- Based on your Basic Pay, you will get other allowances such as DA, HRA, and EPF
- Dearness Allowance (DA)
DA depends on your basic pay, but this allowance helps to handle the impact like inflation. This allowance relates to your living cost which differs based on the locality of employees.
Features of DA
- DA amount applies to taxes
- It is a part of the amount that you get in-hand
- House Rent Allowance (HRA)
This allowance helps the employee to pay his monthly rent amount if he/she stays in a rented house. This HRA is equal to 50% of Basic Pay in metro cities whereas, it is 40% in small towns.
Features of HRA
- It is a part of the amount that you get in-hand
- HRA is 50% of Basic Pay for employees living in cities like Mumbai, Bangalore, Delhi, Kolkata, etc. HRA is 40% of Basic Pay for employees living in small cities like Nagpur, Mysore, etc
- Conveyance Allowance
This allowance is especially for employees to travel from home to office and office to home.
Features of Conveyance Allowance
- It is a part of the amount that you get in-hand
- This allowance affects the in-hand salary for junior-level employees
- Leave Travel Allowance (LTA)
This LTA helps to cover your travel expenses for the employee when he/she leaves for a trip with family members. To claim LTA, one has to submit the travel proof tickets and other things. This LTA covers only travel expenses but not other expenses on a trip of an employee.
Features of LTA
- It is not a part of the amount that you get in-hand
- When you travel for twice in four years, the LTA is free from taxes
- Other Allowances
These other allowances cover additional allowances such as medical allowance, performance allowance, meals allowance, city compensatory allowance, etc. Some companies may provide these allowances while others may not.
Salary Slip Deductions
- Employees Provident Fund (EPF)
One of the components of your pay slip that is deducted from the employee’s salary amount is the Employees Provident Fund. This deduction is usually 12% of your basic pay amount. This fund you will get after your retirement period. This EPF amount is free from tax under Section 80C of the income tax act.
- Professional Tax
This deduction is applicable for all categories of employment such as professionals, salaried persons, and other traders getting an income. This tax depends on the individual’s tax slab and only some states in India use this deduction for employees.
- Tax Deductible at Source (TDS)
An employer may deduct a certain percentage of your income and pay it to the income tax department on behalf of an employee. One can reduce the TDS amount through investment in tax-saving schemes.
Impact of Standard Deduction on Salary Slip
Reintroduction of standard deduction happens in the Union Budget 2018-2019 by FM Arun Jaitley. This increases the standard deduction amount of Rs. 40,000 to Rs. 50,000 for salaried employees. As a result, the tax outgo decreases for pensioners. Finally, this deduction replaced the various components such as transport allowance and medical reimbursement, etc. in the employee salary slip.
Why is Salary Slip important?
Helps to manage income tax payments
A salary slip pdf document may help you to calculate income tax. This salary slip helps the employees to prepare for income tax returns. Thus, an employee can determine how much tax amount he/she has to pay or how much refund amount he/she has to get for every financial year.
Proof of employment
A salary slip format in excel is the best proof for your employment. To travel abroad for employment reasons, you need to submit copies of your salary slip for getting your visa.
Apply for loans or credit card
Since your salary slip format in excel, pdf formats contain the details of your monthly income, you can use it as proof to apply for loans or credit cards. To make borrowings, a salary slip is essential.
Helps to get new jobs
If you want to move to another job, you need to provide copies of salary slip to your new company for making salary negotiations. Check for your salary slip format in excel, download it in any format to apply for new jobs.
Access to Government facilities
A salary slip in excel format allows availing the various subsidized facilities of the Indian Government like food grains, health care, etc at some subsidized rates.
How does Salary Slip help to Save Income Tax?
In a salary slip, there are several components such as House Rent Allowance (HRA), Medical Allowance, Dearness Allowance (DA), etc. present in it to save the income tax that you pay for every financial year. Tax authorities enable companies to design employees’ salaries in such a way that it will help them to save tax using these allowances in income.
Benefits of a Salary Slip
- Salary slip helps to decide the employees about the income that they will get in their hands. They will decide this income when seeing the clarification about how much to pay for income tax every financial year.
- A salary slip decides the employee’s loan repaying capacity and thus, based on your salary, you will get the loan amount.
- Through a salary slip, an employee can find out how much he/she saves towards employee provident fund.
How knowledge of salary slip increases your take-home salary?
To increase your take-home salary, you can follow the below tips.
- To increase your take-home salary, the best way is to reduce the basic salary and adjust the same with long-term benefits. If the basic pay is more, you need to contribute to HRA, DA, and EPF more. But reducing your EPF may affect your settlement amount after retirement.
- Avoid allowances that apply to taxes as a whole. You can do these using tax-free benefits.
- You can get huge benefits from medical and travel allowances.
- Your variable pay applies to taxes, so reduce the amount to a minimum.
Differences between Cost to Company (CTC) and in-hand salary:
|Cost to Company (CTC)||In-Hand Salary|
|This is the total amount that the company spends for its employee during a financial year.||This refers to the amount that an employee gets in-hand as a monthly salary|
|CTC includes basic pay, allowances, pension, and PF.||In-Hand Salary doesn’t include allowances, pension, income tax, professional tax, and PF.|
Taxable/partially taxable & non-taxable components of salary slip
|Fully-Taxable or Partially taxable or Non-taxable|
|Dearness Allowance (DA)||Fully-taxable|
|House Rent Allowance (HRA)||Partially Taxable|
|Medical Allowance||Partially Taxable|
|Conveyance Allowance||Partially Taxable|
|City Compensatory Allowance (CCA)||Fully-taxable|
|Leave Travel Allowance||Partially Taxable|
|Allowances paid to Supreme and High Court’s judges||Non-taxable|
|Allowances paid by the government to its employees living abroad||Non-taxable|
|Allowances paid to employees by UNO||Non-taxable|
|Allowances to the UPSC members||Non-taxable|
Legal Validity of Manual, Digital Pay Slips
Salary slips available in either manual or online salary slip digital format. But when you do any sort of unofficial attacks with a monthly payment slip, it is a big criminal offense. So, never try to alter your pay slip unofficially. This can lead to solving the problem officially in the labor court to resolve your salary slip dispute. But now, due to computerization and bank transfer of payments, criminal offense is getting rare. One can apply for salary pay slip online to get easily.
How to Create Salary Slip Online in Easy Way?
Sometimes, employees get additional payment for their work over an extended shift hour, which will also appear in your pay slip. Now, you understand the importance of pay slip, so let us see pay slip download procedure in steps.
- You can either download a pay slip in word or PDF or excel format. It is better to go for a salary slip format in excel download
- After the above step, you can select the period mentioning the year and month.
- Fill the company details, company name, employee name, ID, designation, phone number, company address, etc.
- Enter the salary components of your employment.
- Enter your PAN card number.
- Now, you can save the file and take the printout of the same.
- The final step is to verify your salary slip by your HR head. Get the company’s stamp and signature.
What is meant by Salary Certificate?
A Salary certificate is like a verification letter that the company issues to the employees that declares the various stuff such as salary, duties, designation, and employment period. You will get a salary certificate for a few reasons such as personal purpose or friend’s reasons. When your management permits you to get a salary certificate, you will get a simple salary certificate format with a subject line mentioning Salary Certificate. One can use to apply for loans at financial institutions based on its interest and validity. Usually, the validity is for less than or equal to one year.
Salary Certificate Format
Salary Certificate format should be in a simple format to understand it easily. Check for salary certificate samples available online. The general format of salary certificate includes details such as employee’s name, address, contact details, designation in the company, etc. In a salary certificate model, you can also see details of basic pay, allowances, and deductions.
Salary Certificate Sample
Let us consider the salary certificate sample:
| SALARY CERTIFICATE
This is to certify that Mr. is working in our ABC Private Limited as
. This is salary drawn for the financial year 2019-20 is as follows.
Total Gross Amount-
Net Salary Amount Paid-
The company issues this salary certificate to the employee on behalf of his/her particular request.
The above is the salary certificate format in word document, which is simple to understand. Get a simple salary certificate pdf format, which is easy to follow for you.
To understand the difference between the salary certificate and a simple salary slip format in excel, consider the salary slip format.
Name of the employee
Bank Account Number
Number of Worked Days
|Earnings||Amount in Rupees||Deductions||Amount in Rupees|
House Rent Allowance
|Gross Amount||Gross Deductions|
Difference Between Salary Slip and Salary Certificate:
|Salary Slip||Salary Certificate|
|A Salary slip is a document that gives detailed information about the salary of an employee.
Here you will get a detailed note of the monthly salary amount.
A salary slip indicates the financial status to get loans or other facilities
A salary slip is proof of employment in addition to providing monthly payment details
|A Salary certificate is a document that the organization’s head issues to an employee for proving the employment status in its company.
Here you will not get a detailed note of the monthly salary amount of an employee.
This salary certificate doesn’t show any financial status.
A salary certificate docx is just proof of employment only.
The Bottom Line
Thus, salary slips are much important for an employee to access loans or long-term benefits. On the other hand, a salary certificate is also crucial for an employee to manage his/her reasons. This salary certificate also helps to declare the employment status of an employee.