A “salary slip” which is also known as pay slip is a document issued monthly by an employer to its employees. It contains the latter’s salary details, like the basic pay, bonuses, deductions, and more.

The recipients of a payslip receive either a hard or soft copy of the same. Although it is generally large or medium-sized organisations that provide a salary slip to their employees, most startups and small organisations shy away from doing that.

That is why employees of such companies have to request their HR managers to get monthly salary slips. However, more and more entrepreneurs and small business owners have started providing monthly payslips to their employees.

Importance of Salary Slip for Employees

Salary slip pays a major role for a salaried employees. A few points why salary or payslips are important for employees have been listed below:

  • Apply for loans and credit cards.
  • Prove that they are salaried employees.
  • Determine your income tax payment.
  • Future pay should be negotiated.

Read on to learn about the essentials of a payslip and salary slip format.

Simple Salary Slip – PDF Download

Click on the following links to download free sample salary payslips.

Simple Salary Slip Format PDFDownload Here

Basic Template of a Salary Slip 

The format of the salary slip is more or less the same at different workplaces. Here are some of the important factors that a payslip should include. 

  • Company’s name
  • Company’s logo 
  • Name of the employee 
  • Employee’s ID number 
  • Designation of the employee 
  • Employee’s PAN number 
  • Leaves took by the employee 
  • Employee’s Bank Account details 
  • Operative workdays of the employee
  • Employee’s PF Account number 
  • Earning and deductions 
  • Gross payment 
  • Net payment 
Simple Salary Slip Format For Small Organisation , Pay Slip Format Excel

Components of a Salary Slip 

In order to understand the components of a payslip, it’s vital to divide them into two parts: 

  1. Salary & Allowances 
  2. Deductions 

Let’s talk about these components in detail. 

Vector banner of payroll, salary payment

Salary and Allowances 

Here are the payslip components that appear under “Salary and Allowances” in a standard salary slip format. 

1. Basic Salary 

A basic salary is the amount employers pay their employees before any deduction or increase occurs. The reason for either could be overtime, a bonus, or an allowance. Also known as “base pay,” “basic salary” is the initial compensation rate. 

2. House Rent Allowance (HRA) 

Employers pay HRA to meet the employees’ accommodation requirements while they live on rent. 

3. Leave Travel Allowance 

It is that allowance that employees receive for travel. Such an allowance covers all the travel costs within the nation. 

4. Conveyance Allowance 

Also known as “transport allowance,” “conveyance allowance” is provided to the employees of a company for travel. However, this allowance applies only from their residence to the workplace. 

5. Variable Allowance 

Employers issue employees a variable allowance when the latter reach their goals or fall far behind them. 

6. Medical Allowance 

This one is a fixed allowance given to employees to meet their medical needs. It is provided to workers irrespective of the fact that they submit medical bills for reimbursement or not. 

7. Personal Allowance 

It is the amount of income that an individual is entitled to receive free of charge every year. The calculation of a personal allowance is based on these: 

  • Gross pay 
  • Gross salary, CTC, total deduction, and net pay 
  • Basic salary (40% of CTC) 
  • DA (50% of basic) 
  • HRA (20% of basic pay) 

8. Special Allowance 

Most organisations pay a special allowance to meet their employees’ unique demands or needs regarding their work performance. That is, it is the fixed amount paid above the basic salary to the employees by their employer. 

Deductions 

A standard format for a salary slip contains the following deductions: 

1. Provident Fund (PF) 

It is a savings tool for a company’s employees. PF is a scheme that most organizations handle under the Employees’ Provident Fund and Miscellaneous Provisions Act of 1952. 

As per this scheme, an employee has to deduct a fixed amount from his salary. The employer pays an equal amount of the PF. This amount earns interest and allows the employee to create wealth over time. 

2. Professional Tax 

The next deduction in the usual format of a salary slip is the professional tax. It is the tax levied on workers by the state government. Employees earning through any medium need to pay it from their earnings. Such taxes vary from state to state. 

3. Tax Deductible at Source (TDS) 

TDS is a particular amount that gets deducted from the salary. It is paid by the company that makes the payment. Conversely, the individual who receives the deposit (employee) is reasonably obligated to pay the tax. 

4. Employees’ State Insurance (ESI) 

Another deduction in the salary slip format is ESI. It is a health insurance plan designed to offer cash and medical benefits to employees. The employer must contribute to the ESI fund by deducting the employee’s contribution from his salary. 

5. Gratuity 

It is a monetary benefit given to employees at the time of their retirement. Companies typically deduct a percentage (4.81%) of an employee’s basic pay + DA to pay for gratuity.

Key Pointers to Remember for a Salary Slip Format 

  • Always have the necessary information about your employees, like their official names, addresses, contact details, and bank account details.
  • Write the name of your company in the top left corner. Under that, you can enter the name and professional details of your employees. 
  • The majority of people create two columns. You can enter salary and allowances on the left side and deductions on the right. 

Here’s a simple salary slip format to help you prepare payslips for your organization. 

Conclusion 

While the format of a salary slip may vary from company to company, the components stay the same. 

An employee’s payslip can be created using software designed especially for the salary slip. Although you can draft salary slips manually, using an HR/payroll platform is ideal. 

Such tools allow you to create salary slips quickly and with no hassle. Besides, they offer you customizable payroll solutions and minimise mistakes. Some structured salary slip format software that you can rely on includes RazorPayX Payroll, Asanify, QuickBooks Payroll, OnPay, and Gusto. 

However, if you want the freedom to draft an entirely customized payslip, you can use Google Sheets or Excel.