Quick answer: a salary slip is the monthly statement of what an employee earned, what was deducted and what was paid. A good Indian payslip shows the employer and employee details, paid days, each earning (basic, HRA, allowances), each deduction (PF, ESI, professional tax, TDS) and the net pay in figures and words.
Employees open their payslip when a loan officer asks for it, when they switch jobs, or when the amount in their bank does not match what they expected. That last moment is where a clear format saves HR an afternoon of explaining.
What a salary slip must show
Think of the payslip in four blocks. If any block is missing, someone will call you.
| Block | Fields |
|---|---|
| Employer | Company name, address, logo, pay month |
| Employee | Name, employee code, designation, department, date of joining, PAN, UAN, ESI number, bank account (last 4 digits) |
| Attendance | Days in month, paid days, LOP days, leave taken |
| Pay | Earnings, deductions, net pay in figures and words |
Useful extras: year-to-date totals, employer PF contribution, leave balance and the tax regime the employee chose.
HR, GPS attendance, shifts, leave, payroll, tax declarations, onboarding, engagement, projects and timesheets — one employee record behind all of it.
Start free See the demoEarnings: the usual components
Basic salary
The base on which PF, gratuity and often HRA are calculated. Since the new Labour Codes came into force on 21 November 2025, the definition of wages matters more: if allowances left out of "wages" add up to more than half of total pay, the extra is counted back as wages. In practice, many employers now keep basic plus DA at around 50% of gross so PF and gratuity are calculated on a fair base.
House rent allowance (HRA)
Commonly 40% of basic, or 50% for employees in metro cities. Whether any of it is tax-free depends on rent paid and the tax regime the employee picks.
Special allowance
The balancing figure that makes the components add up to the agreed gross. It is fully taxable.
Variable items
Overtime, incentives, shift allowance, bonus and arrears. List each on its own line with the month it relates to, so nobody thinks an arrear is a raise.
Deductions: how each one is worked out
| Deduction | Who it applies to | How it is calculated |
|---|---|---|
| EPF (employee share) | Employees covered by EPF | 12% of PF wages (basic + DA). Mandatory up to 15,000 rupees of wages a month |
| ESI (employee share) | Gross wages within the ESI limit (21,000 rupees) | 0.75% of gross wages; the employer adds 3.25% |
| Professional tax | Depends on the state | State slab, capped at 2,500 rupees a year |
| TDS on salary | Employees whose estimated annual tax is above zero | Projected yearly tax, spread over the remaining months |
| Labour welfare fund | Some states only | Small fixed amount, usually half-yearly or yearly |
| Loans and advances | If the employee took one | As per the agreed EMI |
A note on TDS: from 1 April 2026 the Income-tax Act, 2025 replaced the 1961 Act, so section numbers you may have memorised have changed. The idea is the same. Estimate the year's tax from declared investments and the chosen regime, then deduct it month by month.
A worked example
Here is a simple monthly payslip for an employee in Maharashtra with a gross salary of 40,000 rupees, PF capped at the 15,000 ceiling and the new tax regime.
| Earnings | Amount (₹) | Deductions | Amount (₹) |
|---|---|---|---|
| Basic | 20,000 | EPF (12% of 15,000) | 1,800 |
| HRA | 8,000 | Professional tax | 200 |
| Special allowance | 12,000 | ESI | 0 (gross above 21,000) |
| TDS | 0 (no tax due in this example) | ||
| Gross earnings | 40,000 | Total deductions | 2,000 |
Net pay: ₹38,000 (Rupees Thirty-Eight Thousand only).
Two things to notice. ESI is zero because gross pay is above the limit, and the slip says so rather than leaving a blank that looks like an error. Professional tax in Maharashtra is usually 200 rupees, with a higher amount in February, so February's slip will look slightly different.
Handling LOP and mid-month joiners
Most disputes come from partial months. Use one rule and print it on the slip:
- Decide the divisor: calendar days in the month, or a fixed 30. Calendar days is the most common.
- Paid days = days in month − LOP days.
- Each earning = monthly amount × paid days ÷ days in month.
- Recalculate PF and ESI on the reduced wages, not the full month.
For someone joining on the 11th of a 30-day month, paid days are 20, so a 40,000 gross becomes 26,667 before deductions.
Common mistakes that cause complaints
- Net pay in words does not match the figure. Generate both from the same number.
- PF on full basic for one person and on 15,000 for another with no written policy.
- Arrears merged into basic. Show them on a separate line with the period.
- No paid-days line. Without it, an LOP deduction looks like a pay cut.
- Old addresses and logos. Update the template when the company moves.
- Unprotected PDFs sent to personal email.
Making payslips without a spreadsheet every month
A spreadsheet works for five people. After that, every leave approval and every late joiner means editing formulas by hand. Payroll software reads attendance and leave directly, applies each employee's salary structure, calculates PF, ESI, professional tax and TDS, and produces password-protected payslips for everyone in one run.
In MizUp BMS, attendance, leave and salary structures sit in the same place, so the payroll run already knows the paid days. Employees download their own payslips from My Space, which stops the "can you resend my March slip" messages.
Frequently asked questions
What is the difference between CTC, gross salary and net salary?
CTC is everything the company spends on you in a year, including its own PF share and benefits. Gross salary is what you earn before deductions. Net salary, or take-home, is gross minus your PF, ESI, professional tax and TDS.
Can a salary slip be sent on email or WhatsApp?
Yes. A PDF payslip sent by email, WhatsApp or an employee self-service app is widely accepted by banks and employers. Protect it with a password, usually built from the PAN or date of birth.
Why is PF only 1,800 rupees when basic is higher than 15,000?
EPF contributions are mandatory on PF wages up to 15,000 rupees a month. Many employers cap the contribution there, which gives 12% of 15,000, or 1,800 rupees. Contributing on the full basic is allowed but optional.
Is ESI deducted from every salary?
No. ESI applies only when the employee's gross monthly wages are within the ESI limit, currently 21,000 rupees. Above that, the ESI lines on the payslip should be blank or zero.
What does LOP mean on a payslip?
Loss of pay. These are unpaid days, usually unapproved leave or absence. Salary is reduced in proportion to paid days, so a payslip should show days in the month, paid days and LOP days together.
