Salary Slip Explained: What Each Line Really Means
Salary slips look confusing — but you only need to understand a few key numbers to stay in control of your pay and taxes.
You don’t need to understand every line in your salary slip. Focus on earnings, deductions, and net pay — and verify a few critical numbers.
What Is a Salary Slip?
A salary slip (payslip) is a monthly statement issued by your employer showing salary earned and deductions made for that month.
✅ Salary slips are used for tax filing,
loan applications and income proof.
Earnings Section: What You Are Paid For
| Component | What it means |
|---|---|
| Basic Salary | Core pay; PF & gratuity are calculated on this |
| HRA | House Rent Allowance (tax benefit under old regime) |
| Special / Other Allowance | Fully taxable flexible component |
| Bonus / Incentive | Performance-linked, usually taxable |
⚠️ Higher basic increases PF and gratuity,
but may reduce in-hand pay.
Deductions Section: Why Money Is Reduced
| Deduction | Purpose |
|---|---|
| Employee PF | Retirement savings (12% of basic) |
| Professional Tax | State-level tax (where applicable) |
| TDS | Income tax deducted at source |
❌ Deductions are not optional.
Errors here directly affect your tax and savings.
Sample Salary Slip (Simplified)
| Earnings | Amount (₹) | Deductions | Amount (₹) |
|---|---|---|---|
| Basic | 30,000 | Employee PF | 3,600 |
| HRA | 15,000 | Professional Tax | 200 |
| Special Allowance | 10,000 | TDS | 4,000 |
| Gross Pay | 55,000 | Total Deductions | 7,800 |
| Net In-hand Salary | 47,200 | ||
How to Verify Your Salary Slip (10 Minutes)
- Check basic salary vs offer letter
- Verify PF deduction (12% of basic)
- Confirm TDS consistency month to month
- Track bonus/incentive separately
- Match annual totals with Form 16
🎯 This catches most payroll and tax errors early.
Why Your Salary Slip Changes Every Month
- Bonus or incentive payouts
- Tax recalculation after declarations
- Leave without pay (LOP)
- One-time reimbursements
⚠️ Monthly variation is normal —
sudden large changes are not.
Your salary slip is a tool, not a mystery.
Once you understand the basics, you stay in control.