How to Read an Indian Salary Slip

Every Indian payslip is really two lists. On one side are earnings — the components your employer pays you this month. On the other are deductions — amounts withheld before the money reaches your bank. Gross salary is the total of the earnings side. Net salary, also called in-hand or take-home pay, is gross minus total deductions, and it is the only figure that matches your bank credit.

CTC does not appear on most payslips at all, because CTC includes annual items your employer spends on you that are never paid to you monthly.

Basic salary is the anchor of the structure. Provident fund, gratuity and often leave encashment are all calculated on basic (sometimes basic plus dearness allowance), so the size of basic quietly decides several other numbers on the slip.

House Rent Allowance (HRA) is usually set as a percentage of basic. If you pay rent, part of HRA can be exempt from tax under the old regime, subject to the conditions in the Income Tax Act.

Special allowance is the balancing figure. Employers set basic and HRA first, then push whatever is left of your fixed monthly pay into special allowance. It is fully taxable and carries no PF benefit of its own.

Other allowances — conveyance, telephone, LTA, meal card, shift or on-call allowance — vary widely by employer. Some are paid monthly, some only on claim.

Employee provident fund is normally 12% of basic (plus DA where applicable). It leaves your monthly pay but stays yours — it goes into your PF account.

Professional tax is a state levy. Some states charge it, some do not, and the amount is small and capped. Karnataka, Maharashtra, West Bengal and Tamil Nadu are among the states that levy it; the exact slab is set by the state and can change.

TDS (income tax) is your estimated annual tax spread across the year. It moves when you submit or withdraw investment declarations, when you change tax regime, or when a bonus is paid.

Other deductions can include voluntary PF, NPS, insurance top-ups, canteen or transport charges, and loan or advance recoveries.

Here is an illustrative monthly slip for someone on a fixed monthly gross of ₹60,000, with basic set at 40% of gross. The tax figure is an example only — yours depends on your regime and declarations.

Note what is missing from this slip: the employer’s own PF contribution of ₹2,880, the monthly gratuity provision and any insurance premium. All three sit inside CTC but never appear as a line you receive, which is exactly why CTC ÷ 12 overstates your monthly money.

• Does gross minus total deductions equal the amount credited to your bank?
• Is employee PF roughly 12% of basic? A sudden change usually means basic changed.
• Did TDS jump? Check whether a declaration lapsed or a bonus was paid this month.
• Are paid days correct after unpaid leave, a mid-month joining or an exit month?
• Does your PF passbook show both the employee and employer contributions?

When you receive a hike, the percentage is normally applied to CTC or to fixed pay, not to your net pay. That is why a 20% hike almost never increases your bank credit by 20% — PF rises with basic and TDS rises with taxable income. Use the in-hand increase calculator for a directional estimate of the change, and read the CTC guide for the full breakdown.

Tax rules, professional tax slabs and PF wage ceilings are set by law and change from time to time. Treat the numbers above as an illustration of how a payslip is structured, not as current tax advice, and verify current rules with official sources or a qualified professional before acting on them.