What Is Salary Slip Or Payslip? - Complete Information

1. Designation of the employee.
2. The department the employee works under.
3. PAN of the employee.
4. Bank account number.
5. Universal Account Number.

1. Total working days.
2. Leaves.
3. Effective work days.
4. Earnings.
5. Deductions.

1. Gross pay in numbers and words.
2. Net pay in numbers and words.

Salary Slip – Components

Earnings/ Income

1. Basic Pay: Up to 50% of your salary is the basic pay. Other components of the salary depend on the basic pay. Initially, the basic pay is high. However, as your work experience grows in the company, various other allowances will be higher. The first part under the earnings component is the basic pay.

1. Dearness Allowance (DA): Depending on the cost of living, the DA is calculated. Therefore, the DA will vary based on the location. DA and basic pay are considered when calculating the income tax that needs to be paid.
2. House Rent Allowance (HRA): Depending on the city you are living in, HRA will vary. In case you live in a metro city, half of the basic pay will be the HRA. Up to a certain amount of the HRA is exempt from tax.
3. Conveyance Allowance: The amount that is paid to the employee to travel to work is the conveyance allowance. Up to a certain amount of the conveyance allowance is exempt from tax. Up to Rs.1,600 of the conveyance allowance is exempt from tax.
4. Special Allowance: Allowances that are based on the employee’s performance is the special allowance. Depending on the company, the special allowance will vary and tax must be paid on the allowance.
5. Leave Travel Allowance: The amount that is given to the employee to travel when he/she is on leave is the Leave Travel Allowance. Relevant proof must be provided to avail the allowance.

1. Medical Allowance: Medical expenses that are provided by the employer to the employee is the medical allowance. Tax can be saved on medical allowance. However, relevant medical bills must be paid to avail this allowance. Rs.15,000 is exempt from tax under the allowance.

Deductions

1. Employee Provident Fund (EPF): The employer and employee contribute towards the scheme. Tax benefits under Section 80C can be claimed. The EPF amount is governed by the EPFO. 12% of the basic salary of the employee is contributed towards the scheme.
2. Tax Deducted at Source: The Income Tax Department is paid this amount once the deduction is done by the employer. Investing in tax-saving schemes can reduce this amount.
3. Standard Deduction: Under the tax regimes, Rs.50,000 can be used as standard deduction. Medical allowance and travel allowance have been replaced by standard deduction. 

1. Professional Tax: State governments levy this amount. This amount is only payable in certain states.

Salary Slip – Importance

The importance of a salary slip is mentioned below:

1. Government Subsidies can be Availed: Certain free services that are provided by the government can be availed by submitting the salary slip.
2. Credit Cards can be Availed: You can apply for a credit card by providing the salary slip. Since various payment details are mentioned on the slip, the pay slip is an important document that must be submitted when applying for a credit card.

1. Loans can be Availed: You can apply for a loan by providing the salary slip. Since various payment details are mentioned on the slip, the pay slip is an important document that must be submitted when applying for a loan.
2. Future Employment: The salary that is mentioned on the slip is considered when deciding your pay at the next job. New employers will request for old salary slips as well.
3. Income Tax Planning: Depending on the salary, the amount of tax that must be paid can be calculated.
4. Employment Proof: A legal document that shows you have worked in a company is the salary slip. Salary slip must be submitted when applying for a visa and is required in the case of background checks. Your designation will also be mentioned on the salary slip.