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 Check Income Tax Refund Status

Waiting is always tiring. In this covid pandemic scenario people are worried about there income tax refund a lot. As the refunds are coming at snail speed, the anxiety among assesee is increasing day by day. Many a times it is really annoying to call consultants and tax associates to asks for the refund update. I have been regularly receiving calls from people asking about there refund status for F.Y. 2019-20. With this blog I would like to share the process through which anybody can know about his income tax refund in a very simple and easy process. Will explain you the related facts and process in the most simplest way so that a common person can very easily understand.

Dear friends I try to provide you the best details and information, this require research and time. Your support and love provide me encouragement to keep on doing this. Please show your love and support by liking and sharing by blogs. Please don’t forget to follow my blog to so that we can stay connected.

If you wish to see the complete process of finding the income tax refund status with live example go to the video link :  https://youtu.be/n-_dWBgnOd0

What is Income Tax Refund ?

In simple words, Income tax is a statutory liability of the citizen of the country towards government for earning income, which accrue or arise by any source within the country. Against the income arising in the country the income earner (called as assessee) has to pay tax to the government.

“TDS” stands for tax deducted at source and “TCS” stands for tax collected at source.  As per respective provision of the Income Tax act, the payer of the income has to deduct tax from the earning of the payee on behalf of assesee (payee) and deposit it to the government in the form of TDS. TCS is a tax collected by the seller of specified commodities (specified in the Income Tax Act) and paid to the government. I will do come out with a separate blog over TDS and TCS very soon as it a huge topic to cover and explain.

The assessee whose income is subject to TDS and TCS, if does not have a taxable income files income tax return and claim the tax deducted for the financial year in return from the government.  This claiming of excess tax deducted from the income of the assessee in return is called as Income Tax Refund.

How to get Income Tax Refund ?

In order to get your income tax refund you have to file your income tax return for the financial year.

How to Check Income Tax Refund Status ?

After filing your income tax return when the refund is issued can be seen by tracking Income Tax Refund Status. You can do so by following the below simple process :-

Step 1 : Go to www.tin-nsdl.com

Step 2 : Service Menu

At the home page, go to the menu bar and click over “Services” menu.

Step 3 : Status of Tax Refunds Menu

From the Drop-down Menu, Select “Status of Tax Refunds” and wait for the next page to appear.

Step 4 : Status Tax Refund

From the page appearing on the screen. Go to “Status Tax Refunds” and click over “Refund Tracking”. And wait for the page to appear.

Step 5 : Refund Tracking

From the Refund Tracking screen. Go to Taxpayer Refund (PAN) and click over “Proceed”

As we are tracking our own refund status and we are tax payer that is why we are selecting the respective option. And additionally we are tracking our Refund on the basis of PAN (Permanent Account number) so it’s a PAN base search.

Step 6 : Fill in PAN no and Assessment Year

In the “Refund Tracking” screen, fill in your PAN no and Assessment Year. Assessment year should be the one for which you want to know the refund status.

Now, fill in the Captcha Code in the space provided. Fill the Captcha code same as it is shown at the time. Putin the no and alphabets as they are appearing, like be very careful about form of letter i.e. they are capital letter and small letter. As the Captcha code is case sensitive.

Click over “Proceed”

Step 7 : Status of Income Tax Refund

Your Status of Income Tax Refund will be shown. It will mention :

1. PAN – It will show your PAN.

2. Assessment Year - Assessment Year for which Income Tax Refund status is shown.

3. MODE of payment – It will show mode of payment :

        > Direct Credit – this means direct credit to your bank account linked with PAN.

        > NECS – National Electronic Clearing Services is electronic fund transfer.      

4. Reference no -  It the refund transaction reference no.

5. Status – This shows the exact status of refund with additional comments. It mostly have following comments :

I. Refund is already credited to your bank, please contact your bank

II. Account has been closed - Electronic credit rejected by the bank of the assessee as the account number provided to the ITD has been closed. Contact your assessing officer for change in account details and fresh release of refund

III. Account has been closed - Electronic credit rejected by the bank of the assessee as the account number provided to the ITD has been closed. Contact your assessing officer for change in account details and fresh release of refund

6. Account -  It is the account to which refund is transferred. This is the bank account linked with PAN and chosen for refund purpose (if more then one).

7. Date -  It is the date on which refund is provided to you. This will be the date of transfer of refund to your bank account.

This is how you can check your income tax refund status. Don’t forget to like, subscribe my blog. Do share with friends and family the useful information. 

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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. 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.