Understanding Payslip Components: How to Break Down a Salary of Rs. 8000?

Hi everyone,

I want to know about the salary breakup in a payslip. What content should be mentioned in a payslip? Like, Basic, HRA, DA, or what? If the salary is Rs. 8000, how should I prepare the salary slip? What should be the Basic, HRA, DA, and others? Please reply.

Regards

Net Take Home Pay Calculation

Net Take Home Pay = Gross - Deductions. Components that can be included are:

- Basic
- HRA = 40% of Basic or 50% of Basic (In metros)
- Dearness Allowance, which is based on CPI
- Medical = ₹1250/- per month
- Conveyance Allowance = ₹800/- per month (Used by most organizations)

Deductions

- PF = 12% Basic + DA
- Professional Tax (which will also vary as per the salary)
- Gratuity = 4.81% of Basic

Hope it is clear to some extent.

Regards,
Shveta Sharma

For ₹8000 CTC, you can go for the following breakup:

Basic: ₹4000
HRA: ₹1997 (45 to 50% of basic)
Conveyance: ₹800
Uniform or any other allowance: ₹400
Gross Salary: ₹7197

CTC = Gross + Employer ESI + Employer PF
= ₹7197 + ₹323 + ₹480 = ₹8000

Hope this information is helpful.

Regards,
Hemant Agarwal

Thank you for the information, but how do we consider the basic?

Basic = How can we consider the basic?

HRA = 40% of Basic

DA = What is CPI?

Medical Allowance = 1250/- per month. Is it fixed?

Convn = 800 per month. Is it fixed?

Saritha,

Please find attached the Salary Slip Format for your information. Here, I have listed the Basic Salary as 30%. Kindly change it to 50% as you are from Delhi, which falls under Metro Cities.

I hope this information is helpful to you.

Regards,
Rishi

Hello Shveta Sharma,

Thank you for your postings. I need a small clarification. You have mentioned that Gratuity is 4.81% of Basic. Can I know how you arrived at that percentage.

This depends on what has been offered to you in your job offer letter. Your salary slip should include the following information:

- Name
- Grade
- Job Title
- Division/Department
- Date of Employment
- Current Month Salary Date
- Basic Salary
- Housing Allowance
- Telephone Allowance
- Utility Allowance
- Transport Allowance
- Overtime Allowance
- Total Salary Payable (____________________________)

Deductions If Any:

- Your Monthly Pension Deduction
- Loans (If Any)
- Total Salary Transferred To Employee Bank (____________)

Dear friends,

Understanding Gratuity and PF/ESI in Salary Slips

Gratuity, the employer's share of PF, and ESI are not required to be shown in monthly salary slips. One must complete 5 years of service under one employer to be eligible for gratuity. The employee's share of PF and ESI contribution is only shown in the salary slip under the deduction column.

Calculating the Gratuity Component

- For one completed year of service, one is entitled to 15 days' salary/wage (basic + DA) towards gratuity, which means the monthly salary divided by 26 days multiplied by 15 days.
- If one's monthly salary is Rs. 100, they are eligible for gratuity (only if they have rendered 5 years of service) at Rs. 100 / 26 x 15 for each year of service.
- Thus, the percentage of one year's gratuity to the annual salary is Rs. 100 x 15 divided by 26 x 12 (months in a year) = 4.81.

Regards,
SK Hota
Bhubaneswar, Odisha

As per the Income Tax Act of 1961, uniform allowance is exempt from tax up to actual expenses. Additionally, conveyance allowance of 800 per month is fully exempt. The same applies to children's education allowance of 100 per month for two children and children's hostel allowance of 300 per month for two children.

Regards,
Nitin K. Singh
hr.nitinsingh@gmail.com

Hi Pavithra, could you please help me understand what CPI is and how much percentage of dearness allowance should be added to our payslip? Thank you.