Salary Slip Format - Components in Excel

As an employee, you would receive a salary slip every month from your employer, right? If you are unknown with this concept, you must know this is an essential document. However, a lot of people are still unaware of its significance.

The main reason is that most of you must be unaware of the value that a salary slip holds and how helpful it can be to you in the near future.

While the salary slips have become digitised, they can also be found in excel, word and PDF formats. In this blog, let's discuss the salary slip format, its meaning and more.

What Does a Salary Slip Mean?

A salary slip or a salary voucher is a document that an employer is required by law to provide to the employees regularly to confirm salary payments and deductions. A slip could either be printed or mailed to the employee.

It includes a full summary of the employee's compensation components for a given period, usually a month. These components include:

• House Rent Allowance
• Leave Travel Allowance
• Bonus Payments
• Additional Deductions

Importance of a Pay Slip

Despite contradictory beliefs, a payslip is of utmost importance. Jotted down below are some of its benefits:

Foundation for Income Tax Payment

The salary slip serves as the foundation for calculating Income Taxes. It helps prepare the Income Tax Returns by determining the amount of tax to be paid or the amount of refund to be claimed for the year.

Access to Several Facilities

The wage slip entitles you to various government-provided benefits, such as medical care, subsidised food grains, and so on.

Aids in Borrowing

Lenders generally rely on salary slips to ensure that their loans will be repaid. It is a necessary document for obtaining loans, credit, mortgages, and other forms of borrowing.

Eases Comparing Offers

You can compare offers from prospective employers based on the prior salary slips, which makes it easier to evaluate proposals. It also aids in salary negotiations with new companies or for new positions.

Evidence of Employment

Salary slips are vital legal documents that serve as proof of employment. Applicants are frequently asked to submit a copy of their salary slip as proof of employment and designation when applying for travel permits or university admission.

Components of a Salary Slip

The key components for a salary slip format in word file, excel sheet, or PDF can be divided into two categories:

1. Incomes

The following components appear on the pay-in slip format under the incomes section:

• Basic Wage: This is an essential component of a salary, Accounting for approximately 35% to 40% of the total. It helps in determining the pay slip's other components

• Dearness Allowance: This is a stipend granted to employees to help them cope with the effects of Inflation

• House Rent Allowance (HRA): HRA is a stipend granted to employees for paying their own rent. It is calculated based on the rental home's location and is typically between 40% and 50% of the basic pay

• Conveyance Allowance: This is a stipend that covers the expense of transportation from home to work and back again

• Leave Travel Allowance: Employees and their family members receive a leave travel allowance to cover the expense of travel while on leave.

• Medical Allowance: This stipend covers the employee's medical expenses while on the job

• Special Allowance and Performance Bonus: Employees are generally given a performance bonus or a special allowance as a form of encouragement

• Additional Allowances: Employers may pay a variety of other allowances to employees for various reasons. Employers can opt to divide these allowances into their own category or lump them all together under the heading 'Other Allowances'

2. Deductions

Under the deductions section of the payslip template, you'll see the following items:

• Provident Fund (PF): A provident fund refers to a government-managed retirement savings plan for employees who can contribute a portion of their monthly pension fund

• Taxation for Professionals: It is a tax that is paid based on the employee's tax bracket and is only applicable in a few Indian states

• Tax Deductible at Source (TDS): It is deducted from the employee's wage by the employer on behalf of the income tax department, based on the employee's tax slab and other variables

Difference Between Cost to Company (CTC) and In-Hand or Gross Salary

The entire amount spent by the company on an employee is referred to as the Cost to Company (CTC). HRA, gratuity, conveyance allowance, medical expenditures, EPF, and other allowances are all included in the CTC. While gross pay is the amount an employee receives before any deductions, a net salary is the amount received by an employee after all deductions have been made.

In other terms, it's the monthly payment made by the company to the employee. PF and gratuity are not included in the gross salary. The compensation received after deductions is referred to as net pay.

CTC changes depending on a number of circumstances and consequently impacts an employee's net compensation. The problem can be solved by just matching it to the actual amount received. The amount earned before taxes and other deductions is known as gross salary. It does, however, include bonuses, overtime, and other benefits.

How to Create Salary Slip in Excel?

Here are the steps to create a salary slip in excel:

• To make a salary slip, open a new Excel document and fill in the first three rows with your firm name, residence address, and payslip month and year
• Now input the employee's general information, such as name, department, designation, date of hire, Bank account information, gross salary, and any other required information
• Enter the employee's Loss of Paydays (LOPs) and the number of days in the month. Subtract LOPs from the total number of days in the month to get the total paid days
• Add all of the employees' wages, including basic wage, HRA, medical and conveyance allowances, and special allowances, to one column. Calculate them using the total number of paid days. The employee's actual gross salary is the sum of all of his or her Earnings
• Add deductions like professional tax, EPF, TDS, ESI/health insurance, and salary advances to another column
• Subtract all these deductions from the employee's earned gross compensation for that month, and the remaining sum is the employee's net salary
• Take the salary slip printed off of the printer, sign it, and deliver it to the employees

Formulas for Salary Slips

Salary slip excel formulas are mentioned below. It can aid in the computation of gross earnings and deductions.

Simple Salary Slip Format for Small Organisations

The following information must be included in salary slip format:

• The company's name and logo
• Employee's name
• The job title and department of the employee
• Employee identification number
• PAN/Aadhaar number of the employee
• Number of the employee's bank account
• Account number for the Employees' Provident Fund
• Employee's total number of vacation days
• Employees' productive workdays
• Universal account number (UAN)
• Deductions and earnings
• Pay in both gross and net terms

Conclusion

You will receive a salary slip from your company every month via email or in printed format. Your salary and deductions will be detailed on your payslip, as available in the salary slip format PDF, excel, and word versions above. To make various jobs easier for yourself, you must always keep them handy and safe.

Frequently Asked Questions (FAQs)

1. Should I keep my payslips in a secure location?

A: Yes. When you take out loans from banks, file your tax returns, shift employment, and so on, you'll need your salary slip. As a result, you should download your payslip and save them in a secure location and also keep the pay slip excel format handy for future references.

2. Is it legal to have handwritten payslips?

A: Yes. Salary slips can be printed or handwritten, depending on whether they are issued electronically or on paper. Handwritten salary slips hold the equivalent value as those provided electronically. When applying for bank loans, as proof of work, and so on, a copy of handwritten salary slips can be produced.

3. How does a payslip help me save money on taxes?

A: A monthly wage slip comprises numerous components that assist an employee to save income tax each year, such as HRA, DA, Medical Allowance, and so on. The tax authorities allow businesses to structure employees' compensation to save money on taxes by taking advantage of specific allowances included in their pay. These allowances and tax deductions are listed on your payslips, allowing you to save money on your taxes.

4. How can I obtain a copy of my payslip?

A: You can obtain your income by contacting your employer; every employee has the right to obtain a salary slip at any time.

5. How can I double-check my payslip?

A: You may simply verify your salary slip yourself if you know some fundamental salary calculation formulas. Otherwise, enlist the assistance of anyone who is aware of the situation.

6. Is it possible for HR to verify payment information?

A: Yes, your wage information will be verified by HR. It is their responsibility to double-check the pay information of current employees and new hires.

7. Is it possible to make changes to my payslip?

A: Your salary slip can be edited in Excel or PDF format. However, don't tamper with your income information on your payslips; it could lead to difficulties.

8. How can I show my income if I don't have a payslip?

A: Your bank statement, job offer letter, Form 16, or appointment letter are all acceptable forms of proof.