Decoding of Salary Slip

A salary slip is a document that every employee gets at the end of every month. It delineates everything from gross salary to net take-home pay including deductions.

Organizations choose a standard format that includes components such as the salary slip that I have here:

Employee code - It is unique identification that is unique to every employee and is different in all organizations. Its uniqueness helps identify specific employees and avoid any irregularities or errors while disbursing their pay.

Basic salary - It is usually 30-50% of the total salary offered to an individual, due to no particular guideline it differs from person to person.

That’s why it is recommended that one should always negotiate for a higher basic salary otherwise any annual increment in the present salary will usually result in a lower take-home salary. Basically, the ideal is 50% or 40% of CTC

CTC – 6.9 LPA

Basic – 10979/- per month

House rent Allowance -?HRA is the second largest component of the salary slip. It is usually 40-50% of the basic salary and is usually calculated on it. Depending on the city, for metro 50%, and for non-metro 40% tax exemption is given.HRA – 5490/- per month

Old Tax Regime: The old tax regime is a term used to refer to the previous tax regime that was in place in India before the introduction of the new tax regime in 2020. Here the candidate has selected the old tax regime.

Children Edu Allowance: A child education allowance is a type of allowance paid by an employer to an employee to cover the cost of educating the employee's children. Rs 100 is given per child per month maximum of up to 2 children and the child hostel allowance is Rs 300 per child per month for a maximum of 2 children.Here it is 800/- per month

Other Allowance: Other allowances are additional payments made to an employee by an employer to cover various expenses related to the employee's work or personal life. Here it is 23820/-

Washing allowance: A washing allowance is a type of allowance paid by an employer to an employee to cover the cost of laundering the employee's uniforms or work clothes. Here it is 500/-

Variable Pay: Variable pay, also known as performance-based pay or incentive pay, is a type of compensation that is based on an employee's performance or the achievement of specific goals. Here it is 1525/- per month

Transport Allowance: A transport allowance is a type of allowance paid by an employer to an employee to cover the cost of commuting to and from work.

Transport allowance is typically tax-exempt up to a certain limit, provided that the employee is able to furnish proof of payment for transportation expenses to the employer.

Here it is 3152/- per month

PF (Provident Fund): Under the PF scheme, both the employee and the employer contribute a certain percentage of the employee's salary towards a retirement fund.

The PF scheme is administered by the Employees' Provident Fund Organisation (EPFO), a government agency that manages the retirement funds of millions of employees in India. Here it is 1800/- per month

PROF. TAX: Professional tax is levied by the state government in India on individuals engaged in certain professions, trades, and employment. Professional tax is not levied by the central government of India but is imposed by individual states.

Here it is 208/- per month

Standard Deduction: Standard deduction is a fixed amount that is subtracted from an individual's taxable income to reduce their tax liability.

It is an alternative to itemizing deductions, which involves listing out and claiming individual tax deductions such as charitable donations, medical expenses, and mortgage interest. Here it is 50000/-

Chapter VI-A: Chapter VI-A of the Income Tax Act in India is a section that deals with deductions that can be claimed by individuals and Hindu Undivisible Families (HUF) in computing their taxable income. Here it is 121600/-

Taxable Income: Taxable income is the amount of an individual's or entity's income that is subject to income tax. Here it is 257765/-

Investments u/s 80C: Section 80C of the Income Tax Act in India allows individuals to claim deductions on certain investments and expenditures from their taxable income.

To claim a deduction under Section 80C, the individual must have made the investment or expenditure during the relevant tax year. The maximum amount of deduction that can be claimed under this section is Rs 1,50,000 per year. Here it is 1,21,000/-

Mutual Fund: A mutual fund is a type of investment vehicle that pools money from multiple investors and uses that money to buy a diversified portfolio of stocks, bonds, or other securities. It is worth noting that mutual fund investments, like other types of investments, carry risks and may fluctuate in value

Here it is 100000/-

Taxable HRA: HRA, or House Rent Allowance, is a type of compensation that is paid to employees by their employer to help cover the cost of housing

Formula: Taxable HRA = HRA received - (Minimum of the following: (1) Actual rent paid - 10% of salary, (2) 40% of salary if the employee is working in a metropolitan city, (3) 30% of salary if the employee is working in a non-metropolitan city)

Here it is N/A?