What is Salary Slip?: If you are working in any government or private company and are inquisitive about your monthly payments then how will you resolve your inquisitiveness about the monthly payments received by you? The answer is simple: You will contact the headman and ask him for the remuneration details done by the company. The data of the monthly payment of the employer to its employee is provided in Salary Slip also named a Payslip. Read the article to learn about what is salary slip and its importance and components. We have also explained
What is a Salary Slip?
A salary slip or payslip is a detailed financial statement in which employees’ monthly accounts or stipends are provided. It is legally binding to the authority to periodically provide payslips to the employee. In the payslip, segregation of the gross income and the income received in hand are provided. All the minutiae of the income with its deduction is presented to the employee in a hard copy or in pdf format.
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Importance of Salary Slip
Salary Slip or Payslip benefits the employee in many ways. Let’s check out the importance of payslips for working employees.
- Authentication of Employment: It is proof of income for the working employee. If you are applying for any job, visa or any other purpose which requires validation of the job then the salary slip can be very helpful. Also, the previous payslip provides all the details of the employee in the company. These details are their designation, monthly salary, deduction, allowances and other related aspects.
- Helps in Future Jobs: It helps the employee when switching the company as the negotiation statement of the previous income. With its help employees can receive payment at various factors and demand the offers by comparing with the previous job. Most of the time, it is mandatory to present the payslip to the current working place.
- Benefits of loans and Credit Cards: With the help of salary slips, a person can acquire a credit card easily. On the basis of income registered on the payslip, the credit limit is decided by the bank. They can also submit the application for the loan as the bank will be relieved with the payslip. Most of the borrowing or the mortgages are decided by the payslip of the employees.
- Income Tax Planning: All the breakdowns of the present income are provided in the salary slip. It presents the gross income and the in-hand income of the person. On the basis of in-hand income, the tax of the employee is calculated. This helps in managing the tax of the employee and indirectly contributes to our country on fairgrounds. To track the income we can access its outflow, TDS return and income tax refund
- Availing Government Subsidiy: Salary slips also help the citizens of the country to avail themselves of the benefits of government subsidies. As the payslip contains all the details of the income, it becomes proof of their job and remuneration and if they fall in the respective criteria of the subsidy. Then they are permitted for the government subsidy.
Salary Slip Format
The salary slip format contains the structure of the gross income until it achieves the in-hand income of the employees. The breakdown of the income is provided in such a way that all the details of the income are shown appropriately. The format in which the minutiae of the income are provided in the points.
- Company’s Name and Logo
- Employee Name
- Department Name
- Date of Joining
- Identity Number
- PAN or Aadhar Number
- Bank Account Number
- Provident Fund Account Number
- Total Leaves taken by the employee
- Effective workdays
- Universal Account Number
- Pay and allowances
- Gross Total Income
- Net pay
Sample Templates of Salary Slip
There are many formats of the salary slip in which all the components are covered The few templates for the salary slip are given below to give an idea.
Components in Salary Slip
The salary slip comprises a few components which make up the slip. The working employee should know about the components of the salary slip which are simplified below.
- Basic Salary: It is the income negotiated by the employee to the headman without any allowances and deductions. It forms the basis of the current income which constitutes 50% of the salary. In the early phases, the basic income is high and the allowances remain lower. After the higher designation, the salary tends to be lower than the basic income.
- Dearness Allowances: As inflation rises, the dear allowances of income also rise. Dear allowances are directly proportional to income. It is used to counterbalance the growing inflation and is decided by the cost of living. If the cost of living is high in a specific place then the DA will also be high and vice versa.
- House Rent Allowance: When the employee lives in a rented house then the employee is paid a house allowance. In the metropolitan city. The house rent allowance is 50% and in other cities, it is 40% of the basic income. This income is non-taxable by the government.
- Conveyance Allowance: It is the allowance given by the company to its employees for the payment of travelling expenses. It is the amount which is used by the employee to spend on the travel from the company to the home and vice versa. This allowance is non-taxable and can only be used by the employee.
- Medical Allowance: It is the medical expenses incurred by the employee for health. This allowance helps the employee to meet the medical expenditure done by the employee. Employees need to present the proof and then they will be provided with the allowance accordingly.
- Leave Travel Allowance: It is the allowance provided to the employee and their immediate family. Employees need to submit proof of travel. Only then, they are eligible for the allowance. The leave travel allowance only covers train and flight charges when the employee travel on their leave.
- Special Allowance: Special allowances are given to motivate the candidates in their work. This allowance is performance-based and is taxable. The special allowances are different for the companies.
Deduction in the Salary Slip
- Professional Tax: It is the tax levied by some state governments from professional employees. They need to deposit the tax to the government.
- Tax Deducted at source: It is the tax deducted by the company on behalf of the Income Tax Department. It basically depends on the income of the employee ad deducted accordingly.
- Employee Provident Fund: 12% of the basic income salary goes into the EPF. It is the money which will be used by the employee after their retirement.
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Who issues the payslip in the company?
It’s the head of the company or HR who issues the salary slip.
What is a leave travel allowance?
When the employee is on leave and travelling within India then that employee and their immediate family’s expenses will be provided by the company is known as the leave travel allowance.
In what areas is the salary deducted by the company?
The salary of the employee is deducted from the EPF, TDS and Professional tax