What is Salary Slip? Download Sample Format, Importance, Components
Salary slip is such an important document that it is required to be produced for availing benefits and separation payments to an appropriate recipient after an employee is deceased.
What is Salary Slip or Payslip?
A Salary Slip or a Pay Slip is a document which an employee receives from his employer as a proof of the salary he is receiving. The document has a detailed information about the employee’s income,HRA, LTA, Bouns, TA, DA, exemptions, taxes and deductions, etc. It is a very important document because it is needed to file your Income Tax Return.You can avail the Salary Slip through paper mode or through your email. It is vital that your employer provides you your Salary Slip at regular intervals. Employees may be ordered by court to have an amount of their pay paid directly to an external agency, for example as child support payments, etc. and they have to produce this document in such instances also.
What is the importance of Pay Slip?
A Pay Slip is the legal proof of employment based on which your income tax is calculated. It is on this basis that it is calculated how much an employee has actually earned, and how much penalties, bonuses, or tax deductions have been levied on him. In case you go and take a loan from the bank, your Salary Slip becomes the proof of the amount of money you are capable if paying in case you are unable to repay your loan on time. The lenders of properties always need proof of the financial conditions and capabilities of an employee when he takes a loan, or rents a property, and a Salary Slip serves the purpose of providing that assurance on behalf of the borrowing party. You cannot file your Income Tax Returns on time unless you have your Salary Slip. A Pay Slip is an absolute necessity when it comes to availing government subsidies availed by the employee on fuel, grains and health care.
Those who have worked in an institution for a long time, say for 10 years or more can use this Salary Slip to ask for better services or income from their employer. Salary Slip is also used as a legal proof of being employed in a particular company in a certain company. Such proofs are required when an employee has to apply for travel visa, education visa, and so on. Employees receive various allowances that are entitlements under the relevant employee’s award. Some allowances are calculated in an ‘all-purpose’ way, including base pay rate, overtime, leave loading and other general penalties. All-purpose allowances, such as clinical advancement allowances and higher education allowances may be available to employees, but for that they have to provide the authentication to the concerned authorities using their Salary Slip. An employee can also request deductions paid directly to an external agency, for example, health insurance premiums, which are detailed on the Pay Slip.
What are the components of Salary Slip or Pay Slip?
Income of an employee is always mentioned on the left side of the Pay Slip. It mentions an employee’s salary including his wages, pension, annuity, commission, profits, and annual balance amount recognizable under Provident Fund and contributed to the employee’s pension account. The Basic Salary comprises the main component of income, and varies from one company to another. It is fully taxable by the Income Tax Department, and other salary heads are calculated on the basis of Basic Salary only. An optional salary head is Dearness Allowance (DA) that is offered by some companies in order to provide some support to the employees when helping them deal with the adverse effects caused by scenarios such as inflation. Another salary head is House Rent Allowance (HRA) which can be availed by an employee after producing receipts of his rent payment. An employee who has to travel often is provided Conveyance Allowance by his employer to cover the money spent by the employee on expenses of travel from home to work and work to home. If a company provides certain other allowances, bonuses, or additional income to the employee they will be mentioned in the salary head of the Pay Slip. Any reimbursement given to the employee be it in the form of food or fuel will also come under the salary head.
All the deductions made to the total earnings of an employee are always mentioned on the right side of the Pay Slip. These deductions can be of two types: statutory or based on company policy, in which case they may vary from one company to another. Provident Fund (PF) or the savings, Investment availed by an employee for the time of his retirement, deductions from his pay including income tax and superannuation contribution, plus other chosen deductions, such as private health insurance premium and salary sacrifice amounts are counted under this head. PF is calculated as Basic Salary plus DA. Another head in the deductions section of Pay Slip is Employees’ State Insurance (ESI) which covers medical facilities provided to employees. Professional Tax (PT) collected by the state government from all salaried employees, and Tax Deducted at Source (TDS) which comprises the tax deducted from the salary of the employee by the employer on behalf of the Income Tax Department, are also included in the deductions section of Pay Slip. Health insurance premium deductions include an employee’s requested deductions paid directly to an external agency, for example, health insurance premiums, which are detailed on the Pay Slip. Insurance premium deductions include an employee’s requested deductions paid directly to an external agency, for example, insurance premiums. Leave entitlements are also counted among deductions and include employees’ leave entitlements that accrue over time, including recreational, long-service leave and sick leave, depending on employment category.
Now, let us look at the main components of Salary Slip and understand what do they actually mean.
An employee’s Basic Salary comprises about 35 to 50 percent of his total salary. An employee who has a salary of INR 60,000 has a basic salary of INR 21,000. The basic salary of an employee sets the mark against which the rest of the components of salary are calculated.
Employees are also paid Dearness Allowance, especially the government employees from the public sector with the aim to provide coverage against economic hardships that come along with inflation. Dearness Allowance varies from one city to another. In cities like Delhi, Mumbai, Chennai, and Bengaluru the Dearness Allowance offered to employees is much higher than that provided to employees in Patna, Bhopal, Itanagar or Gandhinagar.
Housing Rent Allowance:
The Housing Rent Allowance (HRA) is provided to all salaried employees who have to live in a rented house. The employees are required to produce their rent receipts to avail of HRA. The Housing Rent Allowance also varies in different cities. In metro cities like Delhi, Mumbai, and Chennai, HRA can have a 50% share in an employee’s basic salary while in other cities like Jabalpur, HRA will cover 40% of an employee’s basic salary.
Employees are also given Conveyance Allowance for their travel expenses from home to workplace and vice-versa. Up to INR 16,000 Conveyance Allowance is not taxable. Employees get this payment if they are not already being paid for their travel expenses concerning their work; and when they are not given any transport facilities for work purposes.
Leave Travel Allowance:
Sometimes, the Leave Travel Allowance is given to an employee for the travel expenses he avails for traveling during his leave from office. The LTA is applicable only for 2 days’ travel expenses availed by the employee during his leave and does not cover any other expenses such as food or services availed by the employee during the leave.
Medical allowance is given to all employees who submit valid proof of their medical conditions or suffer an accident or similar health issue. The medical bills are verified before the employee gets his medical allowance. The medical allowance is exempted from taxes up to INR 15,000 limit, beyond which it is fully taxable.
Employees with extraordinary performance and dedication may also be given a bonus, but it totally depends on the will of the employer. These bonuses are also fully taxable.
Employee Provident Fund:
Employee Provident Fund (EPF) is deducted from an employee’s salary. It covers 12% of the employee’s Basic Salary. After retirement, the employees can withdraw these funds to support their life.
Professional Tax is also deducted from the salary of an employee. It is applicable on every person who is earning money from any medium. It is very It is levied by state governments and varies in different states.
Tax Deducted at Source:
Lastly, Tax Deducted at Source or TDS is deducted from the salary of an employee to directly collect tax from the very source of income. Tax deducted or collected at source shall be deposited to the credit of the Central Government. TDS rates vary. An employee must avail of his TDS from his employer for proof of payment of tax to the government.
How to download Salary Slip?
When employees are paid in addition to their ordinary hourly rate formwork performed over a standard shift the amount of money paid appears on the Pay Slip. Now that you know how important Salary Slip is, you must download it. It’s very simple. Just follow these steps and get your Pay Slip.
- Go to http://caomod.nic.in/PaySlips/SalarySlip.htm.
- Choose a period for which you want your Salary Slip indicated against the year.
- Suppose you have chosen the period ‘Mar 2018 – Feb 2019’, you will be redirected to http://caomod.nic.in/PaySlips/index18-19-1.html.
- Enter your employee no.
- Enter your PAN.
- Select the month for which you want your Salary Slip.
Now, this was a demonstration of how one can download Salary Slip. The process is same, more or less. You can go to your employing company’s website. And, follow a similar process to obtain your Pay Slip.