Understanding Payslip Components: How Do You Break Down and Calculate Each Part?

Could you describe the components that we generally include in a payslip, along with the percentage breakdown and calculation details? Please suggest the method for TDS calculation, as well as the types of allowances provided to employees. Thank you. I would appreciate a prompt response.

Regards

For TDS calculation, please refer to Niyanand Yaswanth's Tax Calculator.

Regards,
Satesh K Rajam
[Phone Number Removed For Privacy Reasons]

A payslip will provide the employee's information at a glance. It should contain all general employment information along with statutory details. If you are processing salary payments through a bank account, please include the bank account number. Additionally, include information regarding any salary advances or internal loans.

CTC Structure and Allowances

If you are following a CTC (Cost to Company) structure, some allowances may not appear on the payslip. Ensure that these discrepancies can be explained. For income tax exceptions, you can split the salary as follows:

- Basic & DA: taxable
- HRA: 40% of Basic (Non-metro), 50% of Basic (Metro)
- Uniform Washing Allowance: 500/- per month
- Conveyance: 800/- per month
- Children Education Allowance: 100/- per child (400/- per child if they are in a hostel) per month
- Medical Allowance: 15,000/- per annum
- LTA (Leave Travel Allowance): amount as per your company policy (can be availed twice in 4 years)
- *PF & PT are exempted

Please review and make any necessary adjustments. Thank you.

Regards