How Do I Create a Salary Slip for My Lump Sum Cash Payment in a Small Company?

I work in a very small company and am paid Rs. 5000 per month in a lump sum cash payment. My salary is not broken down into components like Basic, DA, HRA, CA, etc. Additionally, deductions such as TDS, EPF, and PT do not apply to my case given the salary amount and the number of employees.

Could someone please advise me on how to display the breakdown of my salary in the 'salary certificate' and 'salary payslip,' and what details should be included?

Thank you!

Can you advise me on some breakdown? If I show 'consolidated', it might look suspicious, I think. Can there be allowances if the salary is paid in cash?

You haven't mentioned how many people work in your company. You mentioned a salary of 5k, but why are they not entitled to PF? Anyways, if you want to break down the salary, you can consider taking 50% of 5000 as Basic, 40-50% as HRA, 800 for conveyance, etc. However, it's quite confusing as you mentioned that no such deductions are done and no contribution either.

Salary Certificate

Mr. XXXXX is working with us as a "Post Name," placed at "City Name" with a CTC of Rs 60,000/-. These are the CTC details:

- **Head Particular**: Annual Package | Monthly Package
- **Basic**: 24,000 | 2,000
- **HRA**: 18,000 | 1,500
- **Special Allowance (Attire Allowance)**: 2,400 | 200
- **Conveyance Allowance**: 3,600 | 300
- **Medical Allowance**: 3,600 | 300
- **Petrol Allowance**: 6,000 | 500
- **Additional Allowance**: 2,400 | 200

- **Gross Salary Before Deductions**: 60,000 | 5,000
- **Deduction - TDS and Loan Arrears**: 4,800 | 400
- **Gross Salary After Deductions**: 55,200 | 4,600

With Regards,
Name
Authorised Signatory
Company Name

Hi Vikram, thanks a lot. But there is no TDS because my salary is below the taxable slab. How did you put TDS then? Also, can I make a monthly salary slip with these details you provided instead of a salary certificate?

Exclude the TDS part. However, you can prepare the salary slips in this format. This is usually used by start-up companies. If you work in a CA's office, please note that new rules state that even a company with just one employee needs to register under EPF and ESI, and deductions must be made.

Regards, Vikram

Are you sure? I thought the rule for EPF is a minimum of 10 employees; mine has only 5. Do you have any links about this new rule? Also, can I omit some allowances from your list, like medical?

Thank you so much.

Understanding EPF and ESI Rules

Google the rules about EPF and ESI. Yes, you can exclude some points like medical, but usually, medical benefits are found on every company's payslip.

Regards,
Vikram

Oh okay, because I read somewhere that medical allowance has some other complicated rules, so I just felt like omitting it. By the way, check this site: EPFO <link updated to site home>

Employees' Provident Fund and Miscellaneous Provisions Act 1952

The Act is applicable to:

- Every establishment which is engaged in any one or more of the industries specified in Schedule I of the Act or any activity notified by the Central Government in the Official Gazette. (List of Industries/Establishments)
- Employing 20 or more persons.
- Cinema Theatres employing 5 or more persons.

For Employers:

- Establishments employing 20 or more persons and engaged in any of the 180 industries/Classes of Businesses specified.

And for ESI: ESIC-Chinta Se Mukti <link updated to site home> (Search On Cite | Search On Google)

Coverage under the ESI Act, 1948

Applicability

Under Section 2(12), the Act is applicable to non-seasonal factories employing 10 or more persons.

Breakdown of a $5000 Salary

Your breakdown for a $5000 salary is as follows:

- Basic: $2000 (40% of gross)
- HRA: $1000 (50% as you are in a metro area)
- Conveyance: $800
- Special Allowance: $960
- Deduction for PF: $240

Total: $5000

Please correct me if I am wrong.

Hi imok, can you explain why you included the PF deduction? My firm has 5 people, and therefore, there is no PF, right?

PF Eligibility Criteria

PF is applicable if:
1. Your Basic plus DA is ₹6,500 or less.
2. Your age is less than 58 years.

Attribution: https://www.citehr.com/258537-pf-eli...#ixzz1rKkzQvfV

Is PF the Same as EPF?

There is no compulsion for EPF for companies with less than 10 employees according to this site: EPFO

You are correct that there is no compulsion, but it is necessary for employees' future security. Anyways, you can consider the following options: increase the amount in special allowance, or if you prefer to show a deduction, allocate the PF amount to insurance deduction.

First of all, you have to see whether you are receiving the minimum wages as per your designation. You need to refer to the minimum wages GO and mention the basic plus DA as per the gazette, and any remaining balance amount can be allocated to other categories.

For example, if the minimum wage is 3800 and DA is 800, your breakdown should be as follows:
- Basic: 3800
- DA: 800
- Conveyance: 400

However, I hope that you are receiving the minimum wages. Nowadays, the minimum wages are on the higher side, around Rs. 5000.

Thank you.

EPF and Professional Tax Deductions

EPF applies to employees when the number of employees reaches 20 or more in any month within the preceding 12 months. You may follow the list provided by Vikram. Additionally, you have to deduct PT (Professional Tax). Please check the slab with your CA and ensure this deduction is mentioned in the salary slip.

Regards,
Dilip

Professional Tax Applicability

But professional tax is applicable for a monthly salary of $5001 and higher. Therefore, there is no EPF, no PTax, and no TDS. Can 'deductions' in the salary slip look like this: EPF-0, PT-0, TDS-0? Or does it look weird?

Make sure you are not receiving less than the minimum wages. However, deductions can be made for insurance.

Hi again imok, can you explain the insurance deduction? What steps do I have to take for that?