Salary Slip: Salary slip is an important document in our job. While changing jobs, the HR department of the new company gives maximum emphasis on this. This is a legal proof of income for an employee. Let’s know the important things related to it…
Salary Slip: In the changing times, the importance of salary slip has increased in our job. Salary slip is an important document in our job. While changing jobs, the HR department of the new company gives maximum emphasis on this. This is a legal proof of income for an employee. It is also used as proof of employment.
It is also an important document for filing income tax returns and availing loan from the bank. It also helps in negotiating a salary increase while applying for a new job. In this, it is written about the inhand salary and deduction in it.
In the slip, you are given information about what other benefits you get in addition to basic salary or what taxes are payable, so understanding the important head of the pay-slip can help in saving tax.
(1) Basic salary The
basic salary is mentioned first in the salary slip and it is the largest part of your salary. It is used to calculate various allowances. PF and HRA are calculated on its basis. You have to pay tax on basic salary only.
(2) House Rent Allowance (HRA)
HRA can be up to 50% of the basic salary. The amount left after deducting 10% of the basic salary from the rent you pay in a year while you are on rent can also be HRA. And the company deposits that part in both of these which is less. You can claim full or partial tax under Income Tax laws for the house rent you pay.
(3) LTA (Leave Travel Allowance)
LTA is tax-free, which helps employees with travel expenses. You can use it for a trip with your kids, spouse and parents. You can claim tax-exemption by taking a holiday trip at least once in a year. You need to submit a bill regarding your journey with your employer.
(4) Professional Tax (PT)
This tax is deducted on the basis of your salary. It varies in different states. There is a rule to deduct a maximum of Rs 2,500 in a year under PT. Professional tax is a state tax while income tax is levied by the central government. The employer deducts this amount and deposits it to the state government. You can claim this tax.
(5) Bonus or Target Variable Pay (TVP)
Monthly, quarterly or annual bonus or Target Variable Pay (TVP) is paid based on the performance of the employee. It is the employer that decides how much bonus you will get. It usually depends on your performance and profits of the company. It is fully taxable.
(6) Conveyance Allowance or Travel Allowance (Conveyance Allowance/Travel Allowance) TheConveyance Allowance is given to you by the Company when you travel somewhere for the Company’s work. The money received in this is added to the inhand salary. Let us tell you that if you get the Conveyance Allowance up to Rs 1,600, then you will not have to pay tax on it.
(7) Medical Allowance
This allowance is given to you in the form of medical cover. Employees can use this facility when needed. For example, some money is deducted for ESIC on the amount up to Rs 21,000, it is deducted for the health needs of the employee. Earlier this deduction was up to Rs 15,000.
(8) Special Allowance
This is a kind of reward, which is given to encourage employees. Every company’s performance policy is different. It is fully taxable.
(9) Provident Fund (PF)
If your company has more than 20 employees then it is required to follow the retirement benefits under the EPF Act-1952. PF is 12% of your salary, which is deposited in your PF account.
If you leave the job or need it, the amount of PF along with interest is returned. The amount that is deducted from your salary in PF, the same amount is deposited by the company in your PF account on its behalf.
