Net pay / amount: The amount that gets paid into your bank account. Gross pay / amount: The amount that you actually earn before deductions from your salary. It is the pre-tax salary and includes all benefits the company is offering.Įmployee number: An employee number is assigned to each employee when they begin at a company and serves as a unique identifier for each employee. For staff who are paid monthly, this is usually one-twelfth of your annual salary.ĬTC: This stands for “Cost to Company” and is a term for the total salary package of an employee. Glossary of termsīasic pay: The rate agreed between you and your employer as your set pay, without any bonuses or overtime. Remember that these are not standard amounts in all industries and they can differ from company to company. Deductions related to benefits, such as pension, medical aid, life cover and income protection, are usually voluntary but can sometimes be compulsory depending on your employer’s policy. Compulsory deductions include tax and Unemployment Insurance Fund contributions. Voluntary deductions include staff loans, donations to charities, gym fees and in some cases union fees. When looking at deductions, it is important to note that personal/voluntary deductions cannot exceed 25% of your gross pay.
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Total number of ordinary and overtime hours worked.Number of hours worked on a Sunday or public holiday.Number of ordinary and overtime hours worked.Employee’s pay and overtime rates for the month.Therefore, you need to understand what sort of information goes onto your payslip throughout your career.Īccording to the Basic Conditions of Employment Act, your payslip must contain the following information: Your payslip is also how you can provide proof of your employment, and holds a lot of weight with financial institutions. As an employee you have to know how much you will be paid and what all those deductions mean in order to do proper financial planning. Your payslip contains important information including your contribution to UIF (Unemployment Insurance Fund), your tax code, your payroll number, gross pay and net pay.
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It could be your first payslip, or maybe you’ve been working for some years, but either way, what is essential is that you should understand what the information means. You open it up and realise you have no clue what’s going on. You have received your first payslip, online or in an envelope from your finance department. The final deduction in your CTC is your Income Tax Deducted At Source, which represents your tax liability as calculated by your organisation.By David Crossley, CFP® BDO Wealth Advisers
#Difference between payslip and salary slip professional#
Organisational deductions include loan advance installments (if any), Provident Fund paid out from your salary and Professional Tax (if applicable in your state). This amount is fully taxable.ĭeductions in your CTC are essentially amounts that are reduced from the salary that is paid out to you. Other Allowances – Any other allowances that your employee might offer you, including special allowances, performance allowances etc. This means that you can deduct Rs 50,000 from your taxable salary for the Financial Year 2019-2020 if the NDA government is re-elected. The interim Budget 2019 that was announced last week, increased the Standard Deduction to a flat Rs 50,000. However, for the purpose of calculating taxable salary, Budget 2018 replaced both with a ‘Standard Deduction’, or a flat amount of Rs 40,000 that is reduced from your taxable salary. Companies usually provide them on a reimbursement basis, up to a certain limit.
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Standard Deduction: Travel & Medical Allowances – Travel and Medical allowances were given to employees to compensate for commuting and medical expenses. However, if you don’t live in a rented house, your entire HRA will be considered for tax. It will not be considered when calculating your taxable salary. If you live in a rented house, the least of either your HRA, the actual rent you pay or 50% of your basic salary (40% for those who don’t live in Metro cities) is tax free. House Rent Allowance – House Rent Allowance is given to employees who are paying rent. While most Public Sector companies are bound to give their employees Dearness Allowance, Private Sector companies have the option to not give Dearness Allowances to their employees.īasic Salary and Dearness Allowances form the core of your taxable salary. It is calculated using an index that predicts the rise in cost of living. It is also the basis on which other components of your salary slip are calculated.ĭearness Allowance – A Dearness Allowance is an allowance that is given to employees to tackle inflation.
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Basic Salary – Your basic salary is the largest and most significant component of your CTC.