Salary Slip Guide India: Format, Components & Legal Rules (2026)

Under the Payment of Wages Act 1936 and state Shops and Establishments Acts, salary slips must include:

1. Company details — name, address, CIN/GSTIN
2. Employee details — name, employee ID, designation, department, date of joining
3. Bank details — bank name, account number (usually masked: XX1234), IFSC
4. Pay period — specific month (e.g., "April 2026") and working days
5. Attendance — present days, leave days, LOP days
6. Earnings breakdown — each component listed with amount
7. Deductions breakdown — each deduction listed
8. Gross salary — total of all earnings
9. Net salary (take-home) — gross minus total deductions, in figures AND words
10. PAN and UAN — employee's PAN and Universal Account Number
11. Authorized signatory — HR/finance signature, company seal

HRA exemption is the lower of these three:

1. Actual HRA received
2. 50% of basic salary (metro: Mumbai, Delhi, Kolkata, Chennai) / 40% (non-metro)
3. Rent paid minus 10% of basic salary

Example

Employee in Mumbai earns basic INR 50,000/month, HRA INR 25,000/month, pays rent INR 20,000/month:

• Actual HRA: INR 25,000
• 50% of basic: INR 25,000
• Rent - 10% basic: INR 20,000 - INR 5,000 = INR 15,000

HRA Exemption = INR 15,000/month = INR 1,80,000/year tax-free

What You Need to Claim

• Rent receipts (monthly or quarterly)
• Rent agreement (for rent above INR 1 lakh/year)
• Landlord's PAN (mandatory for rent above INR 1 lakh/year)

PF Calculation Example

Basic INR 40,000: PF = INR 40,000 × 12% = INR 4,800/month deducted from salary. Employer contributes another INR 4,800 (split: 8.33% to pension fund, 3.67% to PF).

Professional Tax by State

• Maharashtra — up to INR 200/month
• Karnataka — up to INR 200/month
• West Bengal — up to INR 200/month
• Tamil Nadu — up to INR 208/month
• Delhi, UP, Haryana, Rajasthan — no professional tax

1. Working days match attendance — present + leave + LOP should equal total days in month
2. LOP (Loss of Pay) deduction is correct — (gross salary / total days) × LOP days
3. Basic stays constant — should not fluctuate month to month unless there's an increment
4. PF is 12% of basic exactly — not of gross or CTC
5. TDS is reasonable — roughly matches expected annual tax / 12
6. Bank account number matches — where salary is credited
7. YTD (Year-to-Date) totals match — gross YTD, tax deducted YTD, PF YTD should increment correctly
8. Form 16 will match at year-end — keep all 12 slips to cross-check

• Home loan / car loan application — banks require last 3 months
• Credit card application — last 1-3 months
• Rent agreement — landlords often ask for 3 months as income proof
• Visa application — especially for USA, UK, Schengen, Australia
• New job offer — for CTC verification during BGV
• ITR filing — cross-verify Form 16 with actual slip data
• EPF withdrawal / transfer — proof of last drawn basic salary
• Salary negotiation — old company's slips establish your previous CTC

Retention Recommendation

Keep all monthly salary slips for at least 7 years — matches the income tax notice period. Digital copies (PDF) are legally valid and far more convenient to retrieve.

• Issue within 7 working days of salary credit — required under most state labour laws
• Digital PDF with authorized signatory is legally valid under the IT Act
• Include all statutory components — PF, ESI, PT, TDS (even if zero)
• Show both in-hand and YTD values for every component
• Use a consistent template — sudden format changes confuse employees and banks
• Password-protect PDFs — password = PAN number + DOB (common format)
• Archive for 3+ years — required for audits, PF inspections, and employee BGV callbacks