What goes on a Indian payslip
Reviewed by Mellow Editorial Team, HR & payroll content team
A valid Indian payslip must show every component of an employee's gross pay, all statutory deductions, and the net amount actually paid. Getting each line right is not just good practice — it is a legal requirement under the Payment of Wages Act and, from 2025, the consolidated Labour Codes.
The earnings side
Every payslip starts with how pay is built up. The most common components are:
Basic salary — the foundation of the payslip and the figure from which several statutory calculations flow. It is usually expressed as a fixed percentage of CTC (cost to company).
House Rent Allowance (HRA) — paid to employees who live in rented accommodation. HRA is partially exempt from income tax subject to conditions, so showing it as a separate line matters for both the employer and the employee.
Special allowance — a catch-all component that makes up the balance between basic plus HRA and the total gross salary the employer has agreed to pay. It is fully taxable.
Leave Travel Allowance (LTA) — if the employer provides it, it should appear as its own line. Employees can claim exemption on actual travel costs under specified conditions.
Variable pay or performance bonus — if applicable, shown separately because it may be paid on a different cycle and taxed differently.
The sum of all earnings lines equals gross salary.
The statutory deductions side
This is where compliance sits. Three deductions are mandatory for most employers.
Employee Provident Fund (EPF) — 12% of the employee's basic salary (and dearness allowance, if any) is deducted from the employee's pay. The employer also contributes 12% on top of this, but that employer share does not appear as a deduction from the employee's gross — it is an additional cost to the business. Both contributions go to the EPFO. Show only the employee's 12% as a deduction on the payslip.
Employee State Insurance (ESI) — applies to employees whose wages fall below the notified threshold. Both employer and employee contribute at their respective rates. As with EPF, show only the employee's share as a deduction on the payslip.
Professional Tax — a state-level levy. Rates and slabs vary by state, and not every state imposes it. Check the rules for the state where the employee works and deduct accordingly. Show the amount deducted.
Tax Deducted at Source (TDS) on salary — the employer calculates each employee's estimated annual income tax liability at the start of the year, divides it across twelve months, and deducts that monthly instalment. The applicable rates follow the income tax slabs (rising to 30% under the new regime), with a rebate under section 87A available for lower-income employees and a 4% health and education cess applied on top of the base tax. The employee's investment declarations and actual proofs submitted during the year affect the TDS amount month to month. At year-end, the employer issues Form 16, the certificate of TDS, and files Form 24Q every quarter with the income tax department.
The sum of all deductions subtracted from gross salary gives net pay — the amount the employee actually receives.
What the employer contributes (shown separately or on a CTC statement)
The employer's EPF contribution (12% of basic), the employer's ESI contribution, and any other employer-side benefits do not come off the employee's gross. They are costs borne by the business. Some employers provide a CTC breakup sheet alongside the payslip so employees understand the total outflow, but these figures should not be mixed into the deductions column of the payslip itself. Conflating them is a common source of confusion and disputes.
Gratuity and other long-term provisions
Gratuity does not appear as a monthly deduction on the payslip. It is a statutory lump sum payable to an employee after five years of continuous service, funded by the employer. Many employers show a notional monthly gratuity provision in the CTC structure, but nothing is deducted from the employee's monthly pay. Keep this distinction clear, especially when employees read their offer letters alongside their payslips.
Format and record-keeping requirements
There is no single prescribed payslip template under central law, but the payslip must be issued every pay period and contain enough detail to verify compliance. Under the Labour Codes, the obligation to provide a wage slip is explicit. In practice, a payslip should always show:
- Employee name, ID, department, and designation
- PAN and UAN (Universal Account Number for EPF)
- Pay period and payment date
- Each earning component with its rupee value
- Each deduction with its rupee value and the statutory basis
- Gross earnings, total deductions, and net pay
Maintain payroll records for at least the period required under applicable labour law — in most cases, several years. EPFO and income tax authorities can call for them during audits.
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