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Salary Slip Format & Components | Know Why It is Important5 min read

December 27, 2019 4 min read
salary slip

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Salary Slip Format & Components | Know Why It is Important5 min read

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In sim­ple words, a salary slip is a doc­u­ment that shows the amount of mon­ey paid by an employ­er to an employ­ee. Also known as “pay slip”, this impor­tant doc­u­ment con­tains a detailed descrip­tion of an employee’s total salary as well as oth­er com­po­nents like HRA, LTA, Bonus paid, etc as well as the deduc­tions for a month.

Before going direct­ly to the salary slip for­mat, we should be aware of what salary slip is. Here is a prop­er descrip­tion regard­ing payslip fol­lowed by its for­mat.

Also, find sim­i­lar blogs with sam­ples, tips, & for­mat for email writ­ing:

Usage of a salary slip

Employment Proof

Salary slip acts as legal proof of employ­ment (cur­rent or pre­vi­ous). With this, while apply­ing for a visa or apply­ing for any uni­ver­si­ty for fur­ther stud­ies, you are to sub­mit copies of your payslip to keep it as proof that you worked some­where.

Employment Search

For seek­ing fur­ther employ­ment with a high­er pay scale, salary payslip could help you in mak­ing your employ­er aware of the num­bers you used to earn in your pre­vi­ous job. Mak­ing it very obvi­ous, you are going to get an ele­va­tion in the salary after you show your salary slip in the new com­pa­ny you apply. Salary slip play a major role in the eval­u­a­tion of your expe­ri­ence

To Avail Credit Cards or Loans

The key fac­tor for avail­ing your cred­it card is your salary. The salary slip could help in set­ting a lim­it in cred­it card and could act as eli­gi­bil­i­ty cri­te­ria to see whether the per­son is eli­gi­ble enough to apply for a cred­it card or not. You can also avail of a loan based on your salary slip. With this, salary slip deter­mines your tax­es in the finan­cial year as well.

Components of the Salary Slip:

Salary slip is pro­vid­ed every month when­ev­er a salary pay­ment is done to an employ­ee. Many employ­ers fol­low a cer­tain payslip tem­plate or salary slip tem­plate. While oth­ers just use the stan­dard for­mat which includes the fol­low­ing com­po­nents:

Income

Income is not just about the basic salary. Many oth­er allowances are also present there along with the basic salary in the slip.

1. The Basic Salary

The most impor­tant ele­ment in the salary slip is the basic salary (gross salary) which com­pris­es about 37% to 42% of the com­plete salary. It forms the basis of the oth­er allowances that are to be fol­lowed.

2. House Rent Allowance:

House rent allowance or HRA is an allowance that is paid to an employ­ee to pay the rents for their accom­mo­da­tion. This allowance is giv­en based on the loca­tion.

3. Dearness Allowance:

Dear­ness Allowance is a cal­cu­lat­ed per­cent­age from your basic salary. It is the cost of liv­ing allowance that is only for gov­ern­ment employ­ees.

4. Medical Allowance:

Med­ical allowances are the allowances that cov­er the expens­es of the med­ical of an employ­ee while he or she is serv­ing an employ­er.

5. Travel Allowance:

This is a spe­cial allowance that an employ­ee and his or her imme­di­ate fam­i­ly mem­bers get for their leave trav­els. This allowance helps the employ­ee with any expens­es that might occur when­ev­er they trav­el with­in or out­side the coun­try.

6. Conveyance Allowance:

This allowance is trans­porta­tion charges. The com­pa­ny either pro­vides the employ­ee with a trans­porta­tion facil­i­ty or give an amount for trans­porta­tion.

7. Special allowance and Performance Bonus:

To encour­age employ­ees, employ­ers pro­vide employ­ees with some spe­cial allowance. This would help in moti­vat­ing the employ­ees and enhance their salary slip by adding on more.

Deductions

The deduc­tion part of the salary shows or jus­ti­fies the deduct­ed amount in your payslip. The com­po­nents that cov­er the deduc­tion part are:

1. Provident Funds

Prov­i­dent Funds or sim­ply PF is a manda­to­ry con­tri­bu­tion by an employ­ee. An amount is deduct­ed by the com­pa­ny and is saved which is fur­ther giv­en to the employ­er on the day he or she leaves the office.

2. Professional taxes

Like any oth­er tax­es, the employ­ee has to pay income tax returns based on the employee’s tax slab. Only a few states in India fol­low this deduc­tion. In some cas­es, the salary is ful­ly tax­able while in oth­ers, if it does­n’t fall under the tax slab, it is not tax­able.

3. Tax Deductible at Source

Tax-deductible at source or sim­ply TDS is an amount that an employ­er deducts from the employ­ees’ salary on behalf of the income tax depart­ment.

Salary Slip Format

The pro­cess­ing of the salary slip for­mat is in two ways, either man­u­al­ly or com­put­er-gen­er­at­ed slips. The man­u­al for­mats in some cas­es are not valid so there is an urgent need to grab a copy of your com­put­er-gen­er­at­ed slips.

You could eas­i­ly find your payslip in the appli­ca­tion in which your infor­ma­tion regard­ing the com­pa­ny is present. In most com­pa­nies, there is an appli­ca­tion where one can keep track of his or her activ­i­ties and on the salary as well. One such appli­ca­tion is the “Employ­ee Por­tal”. It stores every­thing relat­ed to your address, pay­roll and job respon­si­bil­i­ties are there.

For­mat of Salary Slip com­pris­es the above-men­tioned com­po­nent with the com­pa­ny name and its logo. To deter­mine you were work­ing for a com­pa­ny, the salary payslip for­mat must be issued under the com­pa­ny’s let­ter­head.

The for­mat may vary from com­pa­ny to com­pa­ny but the com­po­nents will remain the same, no mat­ter in what post you are in.

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Gunjan Rawat is a literature graduate who shows keen interest in Java, SQL and Marketing as well.