What is Payslip, What is Salary Slip, Uses of Payslip (or) Salary Slip

Ultimate Guide on Salary Slip & Pay Slip: Uses, format, types of salary slip Components & What is Payslip (or) Salary Slip. Format & Importance in Income Tax Saving For Employees.

Pay Slip & Salary Slip

Most people either work in a formal or an informal (grey economy) sector based on qualification, preference, and economic standards. Both sectors offer salaries to employees either monthly, bimonthly, or daily. However, each transaction should be recorded and kept as proof. Organized/formal employment provides workers with legal documents called Salary slips or pay slips. The document contains the user’s salary and deduction.

Salary slips are legal proof of the agreed monthly salary or compensation from the employer. Every employee is entitled to a payslip for reference. To ease salary slip production, technology has offered simple digital electronic slips. Today organizations can send all their employees’ salaries and documents through email or HRMS portals. This eliminates regular visits to HR or the finance office for salary slips.

What is Payslip
What is Payslip & What is Salary Slip

Legal Details on a Payslip (components)

A payslip contains comprehensive employee salary data. One can access the following details:

  • Gross salary
  • Net salary
  • House allowances
  • Dearness allowance
  • Conveyance allowance
  • Medical allowance
  • Special allowance

Deductions

  • Professional tax
  • Tax at source
  • Employee provident fund.

What Is Pay Slip?

Important Details on Pay Slip

  • Employee’s name
  • Logo and address
  • Company’s name
  • EPF number
  • UAN
  • Bank account number
  • Total working days and leaves

Salary Slip Format Image

Once employees receive their email, they can download it to attain a hard copy. Most Companies design an employee portal where members get login credentials to access their accounts. From the account, one can avail all pay slips and work-related details. The user needs to follow the page’s download process to view and download the salary in PDF format.

What Is Salary Slip?

Importance of salary slip

A salary slip holds significant information that helps employees conduct different activities.

  • A payslip works as financial proof, especially when traveling abroad, requiring proof of fund details.
  • It helps when applying for a loan from banks and financial institutions.
  • Salary slips allow users to switch jobs easily.
  • The document provides comprehensive salary breakdown details: deductions, allowances, taxes, loans, etc.
  • One can check forced savings like EPF, ESI, and more.
  • Salary slips are best for reference as they hold crucial details like company name, employee name, employee code, UAN, etc. The user can retrieve their UAN or other information on the slip.
  • It’s proof that the employee worked for a certain company.

Salary Slip Components

  • Basic salary

A basic salary is a major component as it’s the backbone for other components. It consists of 35- 50 % of the salary based on the employee’s income. Upon employment, the basic salary is high, but changes as employees grow in the organization. The company provides low basic to avoid topping the allowances.

  • Dearness allowance

The payment helps offset inflation based on the cost of living and location. Dearness allowance is taxable and shows on the earning part of the slip.

  • House Rent Allowances (HRA)

The HRA is the amount paid to employees for their rented accommodation.

  • Conveyance Allowance CA

CA is a travel allowance, a payment to help in commuting from home to work or traveling for work in a different location.

  • Medical allowance

Medical allowance is an amount to cover all/some medical expenses.

  • Leave Travel Allowance (LTA)

The LTA is money-provided vacations for your family or yourself. The amount varies based on holiday destination and means. For example, some organization covers local holidays and train and flight expenses.

  • Special Allowance SA

The Special Allowance is offered based on employee work performance. It is a motivational token to help workers perform.

Deductions

  • Professional tax

The tax is a small deduction by the state government on professionals. It’s not mandatory for all employees, as it applies in some states.

  • Tax Deducted at the source.

The employer deducts the amount sent to the income tax department. The amount varies based on gross salary.

  • Employee Provident Fund (EPF)

EPF is a retirement fund deducted from every employee. The employer also contributes to the amount, as directed by EPFO. The funds are sent to the employee’s PF account every month.

Cost to Company and in-Hand Salary

  • CTC

This is the total amount provided by the organization to an employee. The amount includes all deductions and allowances. CTC works like the gross salary; the components determine the net salary.

  • Gross salary/in-hand salary

 A gross salary is the agreed salary before any deductions are made. The offer letter indicates the amount; however, the employee will get the net salary, take-home, and in-hand salary.

FAQ’s

  1. Are online payslips legal?

    Yes, the emailed or electronic pay slips are legal and can be used for different activities. The document contains all details, same as a hand copy slip.

  2. Why do I need a salary slip?

    There are multiple reasons why people require payslips:Applying for a credit cardProof of funds documentWhen seeking new employment.During loan applicationProof of work at a particular companyRetrieving important information.