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.
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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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