Here’s Why You Need to Save Your Salary Slip

Salary slip is issued as a proof from the employer to the employee mentioning the basic salary and the number of days the employee is paid for. Earlier salary slips used to be printed hard copies. But with digital advancements salary slips are either updated on the HR software or on employees email ID. salary slips abets in filing income tax returns and apply for loans and increment in the present salary while switching for another job. 

Let’s delve a little deeper and discuss the importance of salary slip:

Smart choice

Salary slip assists the employee to choose a job wisely from different organizations. Salary slip works as a negotiating agent for the employee on salary while switching jobs from one company to another.

Tax

 The components on salary slip are treated differently when attached with tax files. It is advantageous in reference to the tax deductions available. It grants the employee to plan their taxes accordingly. 

Components of the salary slip

Salary slip has a vital role to play whenever the employee is applying for a loan. As it comprehends the optimized tax liabilities and gives a better picture to understand the benefits provided by the organization. As the organization has a few of the fixed savings consisting of employees salary and a contribution made by the employer. These benefits are known as ESIC, provident funds. It also mentions the allowances such as dearness allowance, conveyance allowance, house rent allowance, medical allowance, professional tax deductions, employee provident fund, etc. 

Income of the employee

Basic component 

The basic includes 30 to 50% of the salary. Organizations incline to keep the basic amount lower than the allowances.won’t be exceeded. 

Deductions

Professional tax

A small amount of levied by the state or federal government on employees salary. However this tax is implemented only in a few states namely karnataka, west bengal, telangana, tamilnadu, maharashtra, assam, andhra pradesh, tripura, jharkhand, bihar, madhya pradesh. 

Tax deducted at source 

This amount is deducted from the employees salary on behalf of the income tax department. This amount is reduced keeping a tab on the exemption laws implemented by the state and federal government. However section 80C implemented by the government in a way increases the take home amount of the employee.

Employee provident fund

This fund is a contribution to the employees’ savings as retirement benefit. This fund is managed by the Employees provident fund organization under the federal government.

These are a few of the elements mentioned on the salary slip of the employee. It raises the need for an employee to save the salary slip.

Leave a Reply

Your email address will not be published. Required fields are marked *

Do NOT follow this link or you will be banned from the site!