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What is a Salary Slip? Basic Understanding, Importance & Other Aspects

Updated: Jan 11

What is a Salary Slip? Understand the Importance of Salary Slip

Have you ever scratched your head while understanding your own ‘Salary Slip’? I am sure you definitely would have. The components of salary slip are known to all but are difficult to comprehend. To understand how each month's net salary is calculated, you must deep dive in each component of your salary slip. In this article, we will decode a salary slip and understand each of its components.


Table of Content


What is a Salary Slip?

A salary slip primarily contains employer information, employee’s basic information, work-related details, earnings and deductions. Every salaried employee receives a salary slip from the employer after the receipt of monthly salary. It is simply a payment summary of salary paid by the employer and the basis of such payment. Salary slip can be used by an employee as a measure to evaluate the earnings over the course of employment.

Format of a Salary Slip

There is no standard format for a salary slip. It is customized to reflect the information that each company wants to present to its employees. However, a general salary slip includes the following details:

  • The company's name, address, logo, PAN, and GST number, as well as the salary month.

  • Employee data such as name, employee code, date of joining, PAN, bank details, department, and designation.

  • Employee salary computation details such as number of days worked, number of days absent, gross earnings, deductions, and net earnings.

  • The net amount payable to the employee is stated in numbers and in words.

  • If the salary slip is physically presented to the employee, the signatures of the authorized signatory of the company and the employee must be included.

  • If the salary slip is presented in a digital form to the employee, it will be signed digitally by the authorized signatory of the company.

The general format of a salary slip is presented below:

salary slip format

Components of a Salary Slip

Apart from giving the basic details of the employer, a salary slip comprises the information of the employee like date of joining, department/head, number of working days, arrears of salary, advance from salary, all earnings, and all the eligible deductions.

The main components of a salary slip are: Gross earnings, deductions, and net earnings. These are explained below in detail:

Gross Earnings

The gross earnings is a sum of all the incomes earned by the employee for a particular month. It consists of the basic salary and various allowances. Each type of gross earnings is explained as under:

  • Basic Salary: The basic salary is the base of other components of the employee’s total earnings. It is a fixed pay between a range of 30-50% of the