Decoding Salary from Salary Slip : Understanding the Components & Terms of of Employment Agreement

 

It's high time that everyone should understand their salary pay and plan accordingly. I have had numerous interactions with fresher employees who won't have any idea about their actual salary, take home salary and CTC etc.

Understanding your Salary bifurcation is crucial in salary negotiation as well. Salary is an important aspect of employment that not only pays your bills but also determines your standard of living. As a salaried employee, it's important to understand the various components of your salary in the employment agreement.

Basic Salary

As the same suggests, basic salary is the fixed amount of money paid to an employee excluding any other allowances or benefits. This amount is determined by the employer and is usually a fixed percentage of the total salary. The basic salary is the foundation of the salary structure and is used to calculate other components of the salary. It is the one which should be looked at the very first as it is fully taxable.

Take Home Salary

It is the salary you are paid in cash form. Take-home salary is the net amount that you receive after all the deductions from your salary. It is the amount that is credited to your bank account on a monthly basis. Take-home salary is calculated by deducting various taxes and other deductions such as provident fund, professional tax, and income tax from the gross salary.

Allowances/Add on Salary

In simple terms, it is addition to your basic salary. Add-on salary is the amount of money paid to an employee as an additional component to the basic salary. This includes various allowances such as House Rent Allowance (HRA), Dearness Allowance (DA), and Conveyance Allowance (CA). These allowances are usually paid to employees to cover their expenses related to rent, transportation, and other costs.

Reimbursements

The expenses which are incurred in relation to employment and discharge of official duties are reimbursed or repaid by the employer to the employee as were initially paid by the employee. Like telephone bill reimbursement or broadband bill reimbursement.

Retirement Benefits

 

That part of salary which is deducted and paid for your retirement life and it’s planning. Retirement benefits are the amount of money paid to an employee after they retire from their job. These benefits include Provident Fund (PF), Employee Provident Fund (EPF), and Gratuity. PF and EPF are mandatory contributions made by the employee and the employer towards the employee's retirement savings. Gratuity is a lump sum amount paid to the employee by the employer as a gesture of appreciation for the employee's long-term service.

Gratuity

Gratuity is a lump sum amount paid to an employee by the employer as a gesture of appreciation for the employee's long-term service. Gratuity is calculated based on the employee's last drawn salary and the number of years of service.

CTC

CTC stands for Cost to Company, which is the total amount of money that an employer spends on an employee annually. CTC includes all the components of the salary, such as basic salary, allowances, and retirement benefits.

TDS (Tax Deduction at Source)

Employers deduct tax from salary paid to employee's salary and pays it to the government on behalf of the employee. They incorporate all other income component and then calculate tax.

Professional Tax Deduction

Professional tax is a tax levied by the state government on individuals who earn an income. This tax is deducted by the employer from the employee's salary and paid to the state government on behalf of the employee.

Provident Fund Provident

Provident Fund is a retirement savings scheme in which both the employee and the employer contribute a fixed percentage of the employee's salary towards their retirement savings. The contributions made towards Provident Fund are tax-free up to a certain limit.

Tax Planning

Tax planning is the process of managing your finances in a way that helps you to plan your investment and minimize your tax liability.

The deduction and planning over each element will be discussed in my next blog post. Stay tuned and share your comments.

Do Refer the below for benefits :

Taxolawgy With Priyanka Tiwari: How to Safe Tax over Arrears or Advance of Salary Received

Taxolawgy With Priyanka Tiwari: How to Get Form 16 Yourself in 3 Mins

Taxolawgy With Priyanka Tiwari: How to Check Income Tax Refund Status

Taxolawgy With Priyanka Tiwari: How to apply for PAN (Permanent Account No.) Online and Get it in One Hour

 

 

 

 

 

 

 

 

 

 

 

 

 

How to Get Form 16 Yourself in 3 Mins

Today, I’am going to write a very useful blog for you all. I've often encountered situation, where people come to me saying that their employer has not provided them Form 16 or the Employer is not able to provide Form 16 on time etc. This issue is putting them in trouble to file their income tax return or to meet their other obligations. In order to solve this problem I have come out with this blog that how you can get Provisional Form 16 by yourself without going to your employer. But one most important point to this is that firstly, the employer must have paid your tax deducted to the government and secondly must have filed the return for the same. Conclusively if the employer has fulfilled his obligations then the provisional Form 16 will show the exact same details as the original Form 16. With this method you can download your form 16 on provisional basis which will be concise. I have personally done this for many of my clients and it does work. 

What is Form 16 ? 

Form 16 is the TDS Certificate for Salaried Person with complete salary and other details bifurcation. It is provide by Employer. 

Without wasting any more time let’s start learning and download your Provisional Form 16 in just 2-3 minutes.

Prerequisite :

·        Income Tax Login & Password

·        TAN of Deductor

If you want to see the visual process of the above, please click to the Youtube Link : https://youtu.be/-JGp0aiKS6U

Step 1 : Search for www.incometaxindiaefiling.gov.in over your internet browser.

Step 2 : Click on the website link and go to its home page.

Step 3 : Login to your Income Tax Id :-

1.   You will first find an information Screen. Close the Screen. And Click over the “Login here” Button showing at the upper left side of the screen.

2.  Login window will appear.

3.   Fill in your User Id and Password. Your PAN number will be your User Id.

4.   Fill in the captcha code and click on “login”

Step 4 : View “26 AS” :-

1.   Go to the menu bar of your Income Tax Id Home Page.

2.   Click on “My Account”

3.   Select “View Form 26 AS”.

4.   In the Confirmation Window, Click on “Confirm” button.

Step 5 : Navigate to “Traces” website :-

1. Now you will be navigated to an external website “Traces” i.e. www.tdscpc.gov.in

2.   From the dialogue box appearing on the homepage of “Traces” website. Tick the checkbox and click proceed.

Step 6 : View Provisional Form 16 :-

1.   From the menu bar Click “view / verify tax credit”.

2. From the drop-down menu select “Provisional TDS Certificate form 16/16A/27D”

3.  In the new screen appearing, Fill in the TAN of the deductor and select the financial year and assessment year will be automatically filled.

4.   From the Provisional certificate type option, select “Form 16”

5.   Click on “View”

6.   Provisional Form 16 will be displayed on the Screen.

Step 7 : Save Provisional Form 16 :-

1.   Right Click on the Provisional Form 16 appearing over the screen.

2.   Click “Save As” from the drop down option.

3.   Save As Dialogue Box Appears.

4.   Enter the name of the file (if want to change the default name).

5.   Default format is HTML.

6.   Click on “Save”.

Step 8 : Open Provisional Form 16

The Provisional Form 16 is saved in HTML format so you can open  it in any internet browser without the internet connection.  So open it in any Internet Browser.

 

This is the simplest way to get your Form 16 in just three minutes without troubling yourself too much.

Thank you for giving your valuable time. I tried my best to give the simplest way to do your work. Hope you all like it. Please leave your comments and opinions in the comment box below.

  

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Disclaimer :

The above blog is purely for educational and  guidance purpose. It's just the reflection of the author's personal experience and judgment. The author has just provided the general information & understanding and its not at all an alternative of any legal advice or practitioner. It has no connection with the websites mentioned in its contents. The content stated in the blog should be used by the reader at his own discretion and sole responsibility. The content of the blog can be only used for any other document, write-up, article, blog and any written or printed material whether on paper or digitally in any form, with the prior permission of the author.