Reading Salary slip

After few rounds of interviews and negotiations you have bagged the job you wanted with a ‘decent’ salary. However, when your first salary slip arrives, you get a shock.

Daylight robbery is what Mr.X saw on his first salary slip laments executive X with a telemarketing company. His story – he was offered a certain package on his offer letter, numbers that were alluring enough to join the organization right away. But after he received his first salary and the slip that went with it, he was all set to storm to the finance department and complain of being duped, by none other than the department itself. Duping, it was since there was no other visible explanation on the salary slip to justify the missing thousands.

Similarly A, who works with a media house, was livid and shocked to see that her salary slip had slipped a few digits, resulting in a loss of a few thousands that disappeared and no recession was not to be on the part of the overworked finance department.

It isn’t uncommon for HR and finance departments across several organizations across industries to have such irate employees demanding explanations. After all how can their hard earned money not be accounted for at the end of the month?

It happens all the time, sights HR manager with an engineering firm. We once had this employee who wanted his LTA amount to be paid to him every month and reflect in his salary slip accordingly.

If you haven’t got the joke then here it is – LTA or leave travel allowance as it is called can be availed of once a year, after you have completed one year of service in the company. We have just translated one component of your salary slip in plain speak, haven’t we?

However, this isn’t the one and only component of the salary slip that needs to be understood, there are several others. For instance there a few deductions that just drains out a good healthy amount of your salary. Once Y recovered from the initial shock of a sizeable deduction in his salary, he revisited his offer letter in detail. Yet, Y could not explain the cuts on the salary slip, reveals a shocked Y who works with an advertising agency. Though the deductions were listed down separately in the salary slip, somehow they appeared to be written in a foreign script, which was incomprehensible.

Several employees are unaware the basic deductions like income tax, Professional Tax, Provident Fund. Pray, how does one get about understanding these seemingly alien concepts? You see if you are earning a certain package annually, you automatically become liable to pay a part of it as Income Tax to the Government of India. And it is nothing like unofficial recovery, so kindly refrain from these digs. It is the tax payer’s money that provides for your national security, salaries of government employees, road / rail repairs, component or a cut on your salary that is deducted every month. Depending on which slab you fail under, your salary deductions are calculated, accordingly you should factor for those cuts or make wise investments.

Moving on to Professional Tax, though the amount credited to this tax is not as high as Income Tax, it does take away at least a three digit figure off your salary slip every month. The reason being if you are professional irrespective of whether you are an employee or on contract, you have to cough up your share of Professional Tax. Provident Fund is the government’s way of getting you to save for your old age. Now not everyone thinks they would retire and need some money, but wiser people plan and invest early. By investing in Provident Fund, you save for rainy days in your old age. Of course point to be noted here is that even your employers pay a certain amount towards your Provident Fund every month.

Before we sign off, let’s give you some knowledge on your annual bonus which goes by different names in different organizations, but is largely variable Pay. The offer letter might mention a substantial amount under the variable Pay category yet the fine print being if the company makes little or no profit, be ready to get little or no Variable Pay.

In these economically troubled times, try decoding your salary slip so that you don’t keep marching from HR to Finance.


    my salary slip is not showing

  • LALTU888


  • Ram

    I see employees are cheated in the form of GROSS ANNUAL PACKAGE which shows an inflated figure.
    Reason being that they all all the Gratuity, PF Contribution by employers in to their package and cheat the employees.
    Naturally a new employee has no knowledge of these and get cheated. Charterned Accountants are the one do this GROSS PACKAGE deal and cheat them.
    I was sent in a such an offer letter by my friends son who was offered a GROSS ANNUAL PACKAGE. When knock down the amounts not coming into his hand at all unless in an eventuality the monthly take home salary some what same what he was getting in his old company.
    So first the industry should forego this practice and guarantee employees how much is their take home salary in writing.

  • Gautam Mazumder

    hi ,Kindly any body suggest that we all have  to register different professional tax for different states although their are many states where we have not open our offices but have employees