Components Associated With A Salary Slip!
Salary slip is a very common word with which every professional remains aware. Infact, a non-professional also keeps limited knowledge about the structure which a salary slip holds. But not everyone keeps thorough knowledge regarding its overall structure. Therefore, you may keep basic knowledge or you are not aware of the purpose, components & usage involved with it. We can guide you from the beginning. You can learn all the deep details with our crystal clear explanation.
What Is Salary Slip?
Employees get salary slips in return for their full month of service in the organization. Thus, it is a kind of document where all the pay structure of an employee is presented and hence become proof of the pay, allowances & deduction he gets in his job. This is provided in both government & private sectors to keep the official record of each employee.
Why Salary Slip Is Provided To An Employee?
Salary slip is prominent to have for a professional because they can come into use at different stages of life. Thus, here are the listed reasons why a salary slip must be provided to an employee.
Employee Proof
A salary slip works as proof for the income tax department, loan, credit card, work permit, or while getting a new job. At the same time, it becomes formal proof during the working term in an organization where he has all his monthly record pay detail from his company. Therefore, it is a major proof both in the company and outside of the organization.
Instant Reporting
It comes in need when an organization owner needs to have instant reporting. A salary slip of an employee becomes an answer in itself instead of going with any unnecessary inquiry reports. Therefore, an organization does not need to look forward to unwanted documents while checking the pay record/status of an employee who worked years ago. It’s all because of the salary slip provision.
Maintaining Records
A salary slip is a formal way of maintaining a record both for an employee & organization. That’s because every company holds a different pay structure. Therefore, it doesn’t become feasible to gather every employee’s information through different statistics. Infact, a salary slip says all about the payment details, deductions, taxes, and more.
What Elements Come In Salary Slip Format?
An employee’s salary is not just an amount offered for his service. As we all know, it is comprised of various expenses & deductions which an employee necessarily makes. Therefore, all key elements necessarily include;
Basic Salary
A basic salary is an amount that an employee gets offered excluding the other expenses he makes in his job. This is the kind of amount that an employee gets left with after making his monthly expenses.
Allowances
This is a kind of compensation that is offered to an employee apart from his personal expenses.
Travel Allowance
An amount offered to an employee for his monthly expenses relating to daily traveling or for work purposes.
House Rent Allowance
An employee gets an HR allowance to manage his household expenses. Thus, this is usually 40-50% of the basic pay amount offered to an employee.
Dearness Allowance
DA is the percentage amount included with an employee’s basic pay due to inflation impact. Therefore, this amount is taxable and is provided with around 30-50% of the basic salary amount.
Medical Allowance
An employee gets compensation for his expenses support on the leaves he applies. Therefore, this amount adds to his monthly income in a fixed amount based on general illness expenses.
Employee Performance Allowance
An employee also gets a performance allowance on a monthly basis depending upon the extra hours, or quality performance he adds to his work routine.
Bonus Pay
Many organizations provide bonus support to employees depending upon the long-term service & quality they serve for an organization
Deduction
Along with basic pay & allowances, an employee also deals with the following deductions which are mentioned in the employee salary slip . Thus, they include components are;
TDS Deduction
This is the mandatory tax deduction from an employee income generation source. In case of tax exceeds the paying liable amount. The employee becomes eligible for a refund amount.
PF Deduction
This is a kind of deduction that an employee makes in his PF account contributing through the company. Therefore, an employee becomes eligible to withdraw the amount during an emergency, job completion, or while making a job change.
Professional Tax Deduction
This kind of deduction an employee usually makes at the state level. It varies depending upon the variable amount applicable in different states with the salary limit.
What Are The Benefits Of Salary Slip Provision For Employees?
A salary slip doesn’t mean mandatory proof while making long-term service in an organization. Infact, it provides a no. of benefits to an employee. They all relate with;
- Easy Job Change Opportunities
- Helps in purchasing a home, personal or other type of loan.
- Pay slip helps in having a credit card or enhancing its limit.
- Helps in benefitting from government subsidies like food, medical help, etc.
Conclusion
Salary slip provision in every organization retains the economy of a country by bringing the right tax amount into the government account. Therefore, an employee must hold an original salary slip from every organization he serves. Its prominence in long-term work record stable an employee’s professional career and proper tax-paying planning. At the same time, helping the companies to keep the record. Genuine proof like a salary slip couldn’t compete with any other proof in tax deduction & getting deserving benefits & loans. Thus, every professional must be aware of this.
