How to Read Your Salary Slip in India 2026 — Every Component Explained

How to Read Your Salary Slip in India — Complete Guide 2025

Your salary slip (payslip) is the most important financial document you receive every month. Yet most employees don't understand half the components. Here's a complete breakdown.

Sample Indian Salary Slip (₹10 LPA CTC)

Employee: Software Engineer | Month: May 2025

EARNINGS

DEDUCTIONS

**NET PAY (In-Hand): ₹75,100**

Every Earnings Component Explained

1. Basic Salary

• Typically **40–50% of CTC**
• Foundation for all other calculations
• Higher basic = higher PF, HRA, Gratuity

2. HRA (House Rent Allowance)

• **Metro city:** 50% of basic | **Non-metro:** 40% of basic
• Tax-exempt under old regime if you pay rent (Section 10(13A))
• **Not exempt under new regime**

3. Special Allowance

• The "balancing" component: CTC − Basic − HRA − Employer PF − Gratuity = Special Allowance
• **Fully taxable** — no exemption
• Companies use this to fill the CTC gap

4. LTA (Leave Travel Allowance)

• For domestic travel expenses
• Tax-exempt twice in a 4-year block (old regime)
• Must submit travel proof (tickets, boarding passes)

5. Food Allowance / Meal Coupon

• Up to **₹2,200/month tax-free** (as per current rules)
• Usually given as Sodexo/Zeta meal cards

Every Deduction Component Explained

1. Employee PF (EPF)

• **12% of Basic Salary** (capped at ₹1,800/month)
• Goes to your EPFO account, earns **8.25% interest (FY 2026-27)**
• Tax-free maturity amount (after 5 years)
• Check your UAN on [epfindia.gov.in](https://www.epfindia.gov.in)

2. Professional Tax (PT)

• State-specific tax, typically **₹200/month (₹2,400/year)**
• **States with PT:** Maharashtra, Karnataka, Tamil Nadu, West Bengal, Andhra Pradesh, Telangana
• **States without PT:** Delhi, Rajasthan, Haryana, UP

3. TDS (Tax Deducted at Source)

• Income tax deducted monthly by employer
• Based on your **projected annual income and declared deductions**
• Under new regime for ₹0–12 LPA: **₹0 TDS**
• Submit **Form 12BB** to declare deductions (old regime)

4. ESI (Employee State Insurance)

• Only if your **gross salary ≤ ₹21,000/month**
• Employee contribution: **0.75% of gross**
• Employer contribution: **3.25% of gross**
• Provides health insurance benefits

What's NOT on Your Payslip (But in CTC)

How to Verify Your Salary Slip Is Correct

1. **Check Basic:** Should be 40–50% of monthly CTC
2. **Check PF:** Should be exactly 12% of Basic (max ₹1,800)
3. **Check TDS:** Use our [Tax Estimator](/tax-estimator) to verify
4. **Check Gross:** Basic + HRA + Allowances should match your offer letter gross

Frequently Asked Questions

Q: Why is my in-hand much less than CTC ÷ 12?

CTC includes employer PF and gratuity, which are NOT paid monthly. Use our CTC to In-Hand Calculator.

Q: Can I ask HR to restructure my salary?

Yes. Ask to increase HRA, add food coupons, LTA — these reduce your tax liability legally.

Q: What if my employer deducts excess TDS?

File your ITR and get a refund. Excess TDS is always refunded by the Income Tax Department.

Q: Is professional tax mandatory?

Yes if you're in a state that levies it. It's ₹2,400/year max and is deductible from income.