HOW TO CREATE SALARY SHEET | SALARY SLIP WITH FORMULA IN EXCEL IN URDU
Salaried individuals receive salaries periodically from their
employer and mostly on a particular date
Salaried
individuals receive pay periodically from their employer, mostly on a
particular date. The total salary includes basic pay, inclusions, allowances,
deductions, taxes, employer details, employee details, etc.
All
these must be sent to the employee and the salary.
What is a salary slip?
The
document which includes all such details is called a salary slip or pay slip. A
salary slip is one of the most important documents for an employee.
Let
us understand what its important components are:
Broad
components are given below that form part of the income or earnings in the
salary statement or the pay slip:
Basic Salary,
Dearness Allowance,
House Rent Allowance,
Conveyance Allowance,
Medical Allowance,
Special Allowance,
Professional tax,
TDS (Tax Deducted at Source)
and
Employee Provident Fund
Let us now try and understand
every component of a salary slip.
A salary or pay slip contains basic information like the company's name, employee's name, designation and the employee's code. Salary's components primarily fall under income or Earnings and Deductions.
Incomes:
The income part of the salary slip has basic salary and allowances. The same is explained below.
Basic Pay:
It is the basic component of
the salary. It constitutes 35-50 per cent of the salary. It forms the basis of
other components of the salary. At junior levels, the basic tends to be high.
As the employee grows, other allowances tend to be higher. Organisations tend
to keep the basic component low so the allowance pay won't be topped. The
salary is 100 per cent taxable in the hands of the employee. Basic is the first
component on the earnings side of the salary slip.
Dearness Allowance:
It is paid to offset the
impact of inflation on one's pay. It is usually 30-40 per cent of the basic
pay. Dearness allowance is directly based on the cost of living. Hence it is
different for different locations. For income tax, basic and DA are considered
as pay. Therefore it is taxable. It appears on the earnings side of the pay
slip right after the basic pay.
House Rent Allowance:
House Rent Allowance (HRA) is
given to employees living in rented facilities. The HRA depends on the city of
residence of the employee. HRA is 50 per cent of the basic pay for a big city.
It is 30 per cent of the basic pay for all small cities. Since housing rent
allowance is an allowance, it is exempted from tax up to a specific limit,
provided the employee pays the rent. It appears on the earnings side of the
salary slip.
Conveyance Allowance:
Conveyance Allowance is the
amount an employer pays an employee to travel to and from work. It is an
allowance. Hence is exempt from tax up to a specific limit. It appears on the
earnings side of the salary slip. One can save income tax on conveyance
allowance.
Medical Allowance:
Medical Allowance is the
amount an employer pays an employee for medical expenses during the term of the
employment. One can save income tax on medical allowance. However, the employee
only receives this amount on submitting medical bills as proof. If the employee
fails to submit evidence of medical bills, they will receive the Allowance, but
it will be fully taxed. It appears on the earnings side of the salary
slip.
Special Allowance in Salary:
Special allowances include performance-based allowances. These are usually given to encourage employees to work better. Also, these allowances vary from company to company. Special allowances are 100 per cent taxable. It appears on the earnings side of the salary slip.
Tax Deducted at Source (TDS):
It is the amount the employer
deducts on behalf of the income tax department. It is based on the gross tax
slab of the employee. One can reduce this by investing in tax-exempt
investments like equity funds, equity-linked saving schemes, Public Provident
Fund (PPF), National Pension Scheme (NPS) and tax-saving fixed deposits. It
appears on the deductions side of the salary slip. Hence, investing in section
80C instruments of the Income Tax Act increases your take-home salary. One can
invest in mutual funds (ELSS), submit investment proof to the company and claim
TDS returns.
Employee Provident Fund (EPF):
It is the contribution of the employee to the provident fund. This qualifies for section 80C of the Income Tax Act. A Provident fund is the accumulation of funds for an employee's retirement period. The Employees' Provident Fund Organisation governs it.
