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Every employee is entitled to receive a salary slip from his/her employer. This is a legal document that acts as proof of your employment. A pay slip is an important document with all important details about your salary structure, like basic salary, medical allowance, conveyance allowance, deductions, and other information like your employee code, date of joining, bank details, etc.
You must keep the salary slip downloaded and safe since these are used to compute Income tax payable and serve as evidence of your TDS refund claim to the Government (in case required). These can also be used to secure loans from banks and benefits of Government subsidies. These downloaded salary slips are handed out systematically either in an electronic mode or in paper mode. If it is in paper mode, ensure it is signed and stamped by your employer.
You can get your salary slips via different means, which are mentioned below:
As mentioned above, your salary slips are of great worth as it contains all the information about your salary structure, its break up, and the deductions. Companies are also legally bound to create salary slips for all employees as proof of salary payments and deductions made. So it is recommended that you understand your salary slips and their importance.
The above image displays what a standard pay slip looks like. As you can see, there are many terms and sections referred to on the pay slip. To understand them all, refer to the ‘Components’ section below. Before that, it is important to know the difference between CTC and in-hand salary:-
| Cost to Company (CTC) | Gross salary |
| Total amount that a company spends on an employee. It may include direct or indirect benefits both. | The total amount that a company pays to an employee before deductions. |
CTC includes :
|
Gross salary includes :
|
| CTC = Gross Salary+EPF+Gratuity + Other variable pay | Gross Salary = Net salary + All deductions like TDS, Professional tax etc |
Yes, it is important to keep your salary slips safely as they are proof of your employment and the salary paid. These salary paid are also used for various purposes like applying for bank loans, credit cards and for mortgage.
Employer can make the payslip after consulting either their HR or the company’s CA. They will be able to furnish the complete information regarding ‘Cost to Company’ which will be added in the payslip.
The amount computed by the employer remains the same. However, the actual paid at the end of the month depends upon the number of work days put in by the employee. The final amount is calculated by taking attendance, paid leave and unpaid leave into account.
Take your gross salary and deduct your Provident Fund contribution, along with Income Tax and professional tax if it is levied in your location.
Salary up to Rs. 2.5 lakhs is exempted from the tax bracket. 5% tax is applicable for people with a salary between Rs. 2.5 lakhs to 5 lakhs. 20% tax rate is liable on Rs. 5 lakhs to Rs. 10 lakhs tax slab and 30% for people with a salary above Rs. 10 lakhs.
Casual income is income generated/earned at an unusual time. Such income is not included in any agreement and has a negligible possibility of recurring in a year. This income is taxable and is categorised under ‘Other Income Sources’.
You must have noticed that there is always a difference between the salary that is agreed during hiring and the salary which is paid at the end of the month. This is because the salary that is agreed upon is divided under various tax structures and the remaining amount is credited to the respective bank accounts.
‘Cost to Company’ is the amount that the company decides to pay its employees in one year. This includes reimbursements, contributions to the Provident Fund, salary and tax related benefits. Whereas ‘Gross Salary’ is the amount entitled to you but without any deductions.
