Salary Slip India: Every Component on Your Payslip Explained (2026)

Your salary slip arrives every month, and most salaried Indians glance at the bottom line — net pay — and move on. That is a costly habit. Your payslip encodes your entire tax exposure, your retirement savings rate, and whether your employer has actually deposited your PF. Read it properly and you can save thousands of rupees every year.

This guide decodes every line on an Indian salary slip in 2026, including important changes introduced by the Income Tax Act 2025 that affect how TDS appears on your payslip from April 2026 onwards.

What Is a Salary Slip?

A salary slip (also called a payslip or pay statement) is a monthly document issued by your employer showing your earnings, deductions, and net take-home pay for that month. Under the Payment of Wages Act, 1936, Indian employers are legally required to issue salary slips to their employees. [1]

It is different from Form 130 (previously Form 16), which is your annual TDS certificate issued once a year by June 15. Both documents are essential: your salary slip for monthly verification and loan applications; Form 130 for filing your ITR.

2026 Change: Under the Income Tax Act 2025, the annual TDS certificate is now called Form 130 (replacing old Form 16) effective from Tax Year 2026-27 (April 2026 onwards). Any salary slip from April 2026 should reference TDS u/s 392 — not the old Section 192. If your payslip still shows Section 192, flag it with your HR or payroll team. [2]

Standard Salary Slip Format in India

Every Indian salary slip follows a standard three-section format, regardless of employer:

Section 1 — Employee & Pay Period Details Company name and logo, employee name, employee ID, PAN, UAN (for PF), designation, department, bank account number, and the month/year of the payslip.

Section 2 — Earnings (left column) All components your employer pays you: Basic Salary, HRA, DA, Special Allowance, LTA, Bonus, and other allowances.

Section 3 — Deductions (right column) Amounts deducted before your salary hits your account: Employee PF (12% of Basic), Professional Tax (PT), TDS u/s 392, ESI (if applicable), and any loan recoveries.

Bottom line: Net Pay = Total Earnings - Total Deductions

**Salary Slip for Loan Applications:** Banks ask for the last 3-6 months of salary slips when processing home loans, personal loans, car loans, and credit cards. Keep digital copies of every month's payslip in a folder — you will need them faster than you expect.

Salary Components: Earnings Side Explained

1. Basic Salary

The foundation of your entire compensation. Usually 40-50% of your CTC (Cost to Company) in private sector roles. Under the Code on Wages, 2019, basic pay must be at least 50% of gross wages — many companies restructured salary components in 2025-26 to comply. [3]

Why Basic matters for everything else:

  • PF contribution = 12% of Basic (employee deduction + employer contribution) [4]
  • Gratuity = 4.81% of Basic per year of service (paid as lump sum after 5 years) [5]
  • HRA exemption is calculated as a percentage of Basic [6]
  • Leave encashment is based on Basic

Higher Basic = better retirement benefits but slightly lower take-home due to higher PF deduction.

2. HRA (House Rent Allowance)

HRA is typically 40% of Basic for non-metro cities and 50% of Basic for metro cities (Delhi, Mumbai, Kolkata, Chennai).

HRA is partially tax-exempt if you pay rent and choose the old tax regime. The exempt amount is the lowest of: [6]

  • Actual HRA received
  • Rent paid minus 10% of Basic
  • 50% of Basic (metro) or 40% of Basic (non-metro)

Under the new tax regime, HRA exemption is not available — the full HRA amount becomes taxable.

**Tip:** If you pay rent to a family member (e.g., parents), you can still claim HRA exemption — but the rent must be genuine, the family member must declare it as rental income, and you need a proper rent agreement and receipts. See our HRA Calculator for a step-by-step exemption calculation.

3. DA (Dearness Allowance)

DA compensates for inflation. It is standard in government jobs and PSUs. For central government employees, DA was hiked from 58% to 60% of Basic effective January 1, 2026, per a Finance Ministry Office Memorandum dated April 22, 2026. [7] In most private-sector payslips, DA is either absent or merged into Basic Salary.

4. Special Allowance

The catch-all component that makes up the rest of your gross salary after Basic, HRA, and DA. It is fully taxable under both old and new regimes. Employers use it to ensure the salary structure adds up to the agreed CTC.

5. LTA (Leave Travel Allowance)

LTA reimburses domestic travel expenses (airfare or train fare for you and your family) twice in a block of four years. It is tax-exempt on actual travel bills under the old tax regime only. [6] Typically paid out annually or bi-annually.

6. Bonus / Variable Pay

Performance bonus, quarterly incentive, or variable component. Usually credited separately and taxable in the month it is paid.

Salary Components: Deductions Side Explained

1. Employee PF (Provident Fund) — EPF

12% of your Basic Salary is deducted from your pay every month and deposited into your EPF account. Your employer also contributes 12% of Basic — this employer contribution is an additional cost borne by your company and does not appear as a deduction on your slip. [4]

The statutory EPF wage ceiling is Rs. 15,000 per month (unchanged since September 2014 under the EPF Scheme, 2026). [8] This means:

  • If your Basic is Rs. 15,000 or less: PF deduction = 12% of actual Basic
  • If your Basic exceeds Rs. 15,000: mandatory PF is capped at Rs. 1,800/month (12% of Rs. 15,000), unless your employer opts to contribute on full Basic

The EPF interest rate is 8.25% per annum for FY 2025-26, as notified by EPFO on July 1, 2026 (unchanged for the third consecutive year; Government approval conveyed via MoLE letter dated June 17, 2026). [9]

PF contributions qualify for Section 123 (previously Section 80C) deduction under the old tax regime. Check your PF balance monthly at the EPFO portal or via the UMANG app to confirm your employer is depositing the amount shown on your slip — non-deposit is a statutory violation.

2. Professional Tax (PT) — State-Wise Rates

PT is a state-level tax on salaried employees under Article 276 of the Constitution of India. The constitutional maximum is Rs. 2,500 per year. [10] PT applies based on the state where you work, not where your company is registered.

State Monthly PT (approx.) Annual Max
Maharashtra Rs. 200 (Rs. 300 in Feb) Rs. 2,500
Karnataka Rs. 200 Rs. 2,400
West Bengal Rs. 110-208 (slab-based) Rs. 2,500
Tamil Nadu Rs. 208 Rs. 2,496
Andhra Pradesh Rs. 150-200 (slab-based) Rs. 2,400
Telangana Rs. 150-200 (slab-based) Rs. 2,400
Gujarat Rs. 200 Rs. 2,400
Delhi Nil Nil
Rajasthan Nil Nil
UP / Haryana Nil Nil

PT is deductible from your income for income tax purposes under both regimes. [6]

3. TDS (Tax Deducted at Source) — Section 392

This is your monthly income tax instalment. Your employer estimates your annual income at the start of the financial year, projects your tax liability, and deducts it in equal monthly instalments.

2026 Change: From April 1, 2026, TDS on salary is governed by Section 392 of the Income Tax Act 2025, replacing Section 192 of the Income Tax Act 1961. Section 392 also absorbs the old Section 192A (TDS on EPF withdrawals) into a single provision. Any April 2026+ payslip still referencing Section 192 is non-compliant. [2]

TDS varies based on your tax regime choice, investment declarations submitted to HR, and mid-year bonuses or salary hikes. If total TDS across 12 payslips does not match the final tax in your Form 130, you either get a refund or pay the difference when filing ITR by July 31.

4. ESI (Employee State Insurance)

Applicable only if your gross salary is Rs. 21,000 or less per month. Employee contribution is 0.75% of gross salary. [11] Provides health insurance and sick leave benefits through ESIC. Most corporate employees earning above Rs. 21,000 are not covered.

CTC vs. Gross Salary vs. Net Salary

This is the most searched question about salary slips — and the most common source of confusion for first-time earners.

Term What It Means On Your Payslip?
CTC Total employer cost: your salary + employer PF + gratuity provision + insurance No
Gross Salary All earnings before any deductions (Basic + HRA + DA + allowances) Yes — as "Total Earnings"
Net Salary Take-home pay after all deductions Yes — as "Net Pay"

Key relationship: CTC > Gross Salary > Net Salary

A worked example for Rs. 10 lakh CTC, metro city, new tax regime (FY 2026-27):

Component Monthly (Rs.)
Basic (40% of gross) 33,333
HRA (50% of Basic, metro) 16,667
Special Allowance 26,167
Gross Salary 76,167
Less: Employee PF (12% of Basic) -4,000
Less: Professional Tax -200
Less: TDS u/s 392 (new regime, approx.) -3,150
Net Take-Home ~68,800

Employer PF (Rs. 4,000) and Gratuity provision (Rs. 1,600 approx.) are in your CTC but never reach your account.

**Quick Check:** For most salaried Indians, net take-home is 70-90% of CTC — the gap widens as income rises into higher tax brackets. A Rs. 12 lakh CTC typically translates to Rs. 80,000-85,000 in-hand per month on the new tax regime. Use our Income Tax Calculator to model your exact figure.

Old Regime vs. New Regime: What Changes on Your Payslip?

Your tax regime choice directly controls how much TDS your employer deducts each month. [12]

Factor Old Regime New Regime
HRA exemption Available if rent paid Not available
80C / Section 123 (PF, PPF, ELSS) Up to Rs. 1.5 lakh Not available
80D / Section 126 (health insurance) Up to Rs. 25,000 Not available
NPS extra deduction (80CCD(1B)) Up to Rs. 50,000 Not available
Standard deduction Rs. 50,000 Rs. 75,000
Tax slabs Higher rates, more deductions Lower rates, fewer deductions
Monthly TDS Lower if deductions are high Lower if deductions are limited

The new regime's higher standard deduction of Rs. 75,000 (vs. Rs. 50,000 in the old regime) was introduced in Budget 2024 and confirmed unchanged in Budget 2026. [13]

The breakeven point is roughly Rs. 3.75-4.25 lakh in total deductions. If your 80C + HRA + NPS + 80D claims exceed that threshold, the old regime saves more. Otherwise the new regime wins.

See our New vs Old Tax Regime guide to calculate your personal breakeven.

Common Payslip Errors to Watch For

Check these every month — catching errors early saves significant money and hassle:

  1. PAN or name mismatch — causes loan rejection and ITR processing delays
  2. PF not being deposited — verify on EPFO passbook; non-deposit is a statutory violation under the EPF & MP Act [4]
  3. Wrong tax regime — many employees switch regime but payroll system is not updated
  4. TDS jumps in Jan-March — normal; employers recalculate for Q4 after actual investment proofs are submitted
  5. Section 192 on April 2026+ slips — should be Section 392; flag this with HR [2]

How to Check If Your PF Is Being Deposited

Deducting PF from your salary but not depositing it with EPFO is a statutory violation under Section 14 of the EPF & Miscellaneous Provisions Act, 1952. [4]

Steps to verify:

  1. Go to epfindia.gov.in or open the UMANG app
  2. Log in with your UAN (Universal Account Number) and password
  3. Check "Passbook" — each month's employer deposit should appear within 25 days of month-end
  4. If deposits are missing, first raise it with your HR/payroll team
  5. If unresolved, file a complaint at the EPFO grievance portal

How to Use Your Salary Slip Beyond Monthly Verification

  • Home loan: Banks ask for 3-6 months of salary slips to assess repayment capacity
  • Personal loan / credit card: Same income proof requirement
  • ITR filing: Cross-verify gross salary and TDS u/s 392 against Form 130
  • HRA exemption: Required to calculate exempt amount when filing ITR under old regime
  • Salary negotiation: Historical payslips document your compensation growth with proof
  • Job change: New employer's payroll team needs your latest slips for onboarding and TDS computation

Frequently Asked Questions

Q: What is PT in salary slip? PT stands for Professional Tax — a state-level tax levied by state governments under Article 276 of the Constitution. The constitutional maximum is Rs. 2,500 per year. States like Delhi, UP, Rajasthan, and Haryana do not levy PT at all. [10]

Q: What is the meaning of HRA in salary slip? HRA is House Rent Allowance — a salary component to help cover rental expenses. It is typically 40% of Basic (non-metro) or 50% of Basic (metro cities). Under the old tax regime, it is partially tax-exempt under Section 10(13A) of the Income Tax Act if you pay rent. [6]

Q: How is TDS calculated on my salary slip? Your employer estimates your full-year tax liability at the start of the financial year (based on your regime choice and declared investments), divides it equally over 12 months, and deducts it monthly. From April 1, 2026, this is governed by Section 392 of the Income Tax Act 2025 (previously Section 192 of the 1961 Act). [2]

Q: What is the difference between gross salary and net salary? Gross salary is your total earnings before any deductions (Basic + HRA + DA + allowances). Net salary — also called take-home or in-hand salary — is what gets credited to your bank account after Employee PF, Professional Tax, TDS, and ESI are deducted.

Q: What is CTC in a salary slip? CTC (Cost to Company) does not appear on your salary slip. It is the total annual employer cost for you — gross salary plus employer-side statutory contributions like Employer PF (12% of Basic), gratuity provision (4.81% of Basic), and insurance — none of which reach your bank account directly.

Q: What is Form 130 and how is it different from Form 16? Form 130 is the renamed Form 16 under the Income Tax Act 2025, effective Tax Year 2026-27. It is your annual TDS certificate issued by your employer by June 15, showing cumulative salary, exemptions, deductions, and tax deducted for the full year. Your monthly salary slip shows monthly TDS; Form 130 is the annual summary used for ITR filing. [2]

Q: How do I know if my employer is depositing my PF? Log into your EPFO passbook at epfindia.gov.in or the UMANG app using your UAN. Each month's employer deposit should appear within 25 days of month-end. Missing deposits are a statutory violation — raise it with HR and file a grievance at epfigms.gov.in if unresolved. [4]

Summary Checklist: Reading Your Payslip in 5 Minutes

  • Verify your name, PAN, and month/year on the slip
  • Check Basic Salary = 40-50% of gross (roughly)
  • Confirm HRA = 40% or 50% of Basic based on your city
  • Check Employee PF deduction = 12% of Basic (capped at Rs. 1,800 if Basic exceeds Rs. 15,000)
  • Verify TDS is shown as u/s 392 (not Section 192 from April 2026)
  • Calculate Net Pay = Total Earnings - Total Deductions
  • Log into EPFO passbook monthly to confirm PF is actually being deposited

Related Calculators and Guides

Sources {#sources}

  1. Payment of Wages Act, 1936 — India Code, Ministry of Law & Justice
  2. Income Tax Act 2025 — Section 392 (TDS on Salary) & Form 130 — Income Tax Department, Government of India; effective April 1, 2026
  3. Code on Wages, 2019 — Ministry of Labour & Employment, Government of India; 50% basic wage floor
  4. Employees' Provident Funds & Miscellaneous Provisions Act, 1952 / EPF Scheme 2026 — EPFO, Ministry of Labour & Employment; 12% contribution rate, Rs. 15,000 wage ceiling
  5. Payment of Gratuity Act, 1972 — India Code; gratuity formula (15/26) = 4.81% of Basic per year
  6. Income Tax Act 2025 / Income Tax Act 1961 — Income Tax Department; HRA exemption under Section 10(13A), LTA under Section 10(5), PT deductibility, standard deduction
  7. Dearness Allowance hike to 60% — Finance Ministry OM dated April 22, 2026 — 7th CPC DA, Ministry of Finance, Dept. of Expenditure; effective January 1, 2026
  8. EPF Scheme, 2026 — Wage Ceiling Rs. 15,000 — Gazette Notification, Ministry of Labour & Employment, June 29, 2026; ceiling unchanged since September 2014
  9. EPF Interest Rate 8.25% for FY 2025-26 — EPFO Circular No. INV-11/2/2021-INV/E-41960/2519 dated July 1, 2026; Government approval via MoLE letter dated June 17, 2026
  10. Professional Tax — Article 276, Constitution of India — constitutional cap of Rs. 2,500/year; state-wise rates per respective State Finance Acts
  11. ESI Act, 1948 — Contribution Rates — ESIC, Ministry of Labour & Employment; employee contribution 0.75%, gross salary threshold Rs. 21,000/month
  12. New vs. Old Tax Regime — Finance Act 2024 & Income Tax Act 2025 — Income Tax Department; default new regime from FY 2024-25 onwards
  13. Standard Deduction FY 2026-27 — Union Budget 2024 & Budget 2026, Ministry of Finance; Rs. 75,000 (new regime), Rs. 50,000 (old regime); confirmed unchanged in Budget 2026

Disclaimer: This article is for informational purposes only and does not constitute tax or financial advice. Tax laws and salary structures vary by employer and individual circumstances. All statutory figures are current as of September 2026. Consult a qualified Chartered Accountant or tax advisor for personalised advice.