Understanding Payslip Components for Proprietary Firms: What Are the Rules and Percentages?

Hi All,

This is regarding the payslip structure with different components of the payslip.

Q1) What are the mandatory components of a payslip for a "Proprietary Firm"?

Q2) Is there any statutory rule about what should be the percentage of each of the components compared to BASIC? What should be the percentage of HRA, Travel Allowance, etc.?

Please let me know.

Thanks,
Santosh

In my opinion, we are required to issue wage slips under the applicable Minimum Wages Act/Contract Labour (R&A) Act. Forms are provided by the applicable central/state rules. These forms provide us with the components to be shown in wage slips. In general, we see the rate of gross salary, number of days worked, leaves and holidays taken, wages/salary earned, and net pay. Basic and other allowances are fixed by the employer, keeping in view the minimum rates of wages as set by the appropriate government for the employees working in their employment.

With Regards,
R N KHOLA

Hi Santosh,

PF, ESI, bonus, etc., are statutory components if applicable. However, allowances like HRA, medical, conveyance, etc., are not statutory components; these are provided to offer the maximum tax benefit to employees.

Best Regards,
Devesh Chauhan

Dear all,

The provision for wage slips is meant for the proper awareness of the employee concerned regarding the rate of their salary/wage, allowances, number of paydays, leaves availed, statutory deductions, and net payable.

Accordingly, the payslip should contain each and every component of their rates, earnings, deductions, and net payable. I do not agree with Mr. Devesh Chauhan's suggestion for the exclusion of certain components like HRA, medical, conveyance, etc., from the wage slip.

P. K. Sharma

Dear PK Sharma,

Please refer to my post carefully. I have not suggested excluding components like HRA, medical, conveyance, etc. The employer may include or exclude them as per their choice. No government authority will insist that the employer provide these components as they are not statutory. However, in order to provide tax benefits to employees, the employer may add these components. No issue.

Best Regards,
Devesh Chauhan