The percentage of HRA is dependent on the city of an employee. House Rent Allowance (HRA) is a benefit given to employees residing in rented houses.Dearness Allowance (DA) was introduced by the government to help employee reduce the impact of inflation and is often 5% of your employee’s basic salary.And, it is the basic salary that is used to calculate DA, PF & ESI contributions. Basic Salary forms the most essential component, making up 35-40% of your entire salary.Few major components of incomes or earnings are: The earnings or incomes record the salary being earned and any other allowances, bonuses or gains that form an employees income. What Are The Components Of A Salary Slip?Īny salary slip has two major components: earnings/incomes and deductions. Admission cells and recruiters require salary slips to validate the claims made by your employees. Salary slips also play a critical role in your employee’s background verification when changing jobs or applying for higher studies.Providing your employees with a salary slip can help them better negotiate salary with prospective employers. While you wouldn’t want your employees to leave, it’s a harsh reality that they eventually will.The salary slips help banks and financial institutions to asses your employee’s creditworthiness and repayment capability.

Your employees will also need their salary slip if they want to avail a credit card or financial loan.The salary slip contains the break-up of your employee’s salary which can help them understand their take-home salary, taxes paid to the government and forced savings such as PF and ESI.Here are 4 major reasons salary slips are important. And, it is your responsibility to ensure salary slips are generated and sent to employees every month. Salary slips are important for your employees for a variety of reasons. As an employer, you are legally bound to issue salary slip to your employees as proof of salaries paid and necessary deductions made.

This document can either be printed out and given to the employees or mailed to them.

What are the components of a salary slip?Ī salary slip can be defined as a document issued by an employer to its employees, containing the detailed breakdown of an employee’s earnings and deductions for a given month.

In this article, we will be covering the following topics. However, the importance of a salary slip is often overlooked, and the need to understand how to read and create a salary slip is ignored. Salary slips are just as valuable as any other written proof is – investment documents or purchase invoices. (Oh, the sweet sound of that morning SMS.) And, salary slip is the written or printed document entailing the details of your salary. If the end of the month leaves most of us dreadful, the beginning of the new month brings about a pleasant joy as our hard-earned money gets credited to our account.

Salary slip format india