Salary Certificate and salary slip seem quite the same thing to some people. But these two are completely different documents and budding professionals must know that. Both are extremely essential for various needs and have several uses. This article talks about salary slips and salary certificates in detail and also provides various sample formats of the same. Keep reading!
What is a Salary Certificate?
Salary Certificate is a document given to an employee by the employer of an organization to declare his employment. This certificate is made on the organization letterhead along with the company stamp and sign. A salary certificate covers details about the salary of the employee, the period of employment, and the salary credited for a particular period. It serves as proof that an employee is associated with and is working for the organization and is receiving a salary for his work.
Components of a Salary Certificate
A salary certificate format consists of an employee’s details like monthly salary, total deductions, net salary summary, etc. In addition to that, it contains a lot more components. Check them out in the table below:
|Employee’s name||Joining date||Dearness Allowance (DA)|
|Employee Code (If present)||Address||House Rent Allowance (HRA)|
|Basic Salary of the employee||Employee’s cost to the company||Medical Allowance (MA)|
|Gross Salary of the employee||Employee’s designation||Special Allowance|
|Status of the employee (temporary or permanent)||Employee’s department||Travel Allowance|
|Net allowances||Signature of the authority||Provident Fund Deduction|
Here is a detailed description of the main components of a Salary Certificate:
Basic Salary of the employee
Basic Salary of an employee constitutes of about 35% to 50% of their total salary. This figure holds great importance as many other particulars of the certificate depend on it.
Gross Salary of the employee
The gross salary of an employee is their salary before undergoing any deductions. It includes a lot of components such as basic salary, allowances, pension, perquisites, and salary arrears. However, reimbursement for medical expenses, LTC, free meals, and gratuity do not for a part of gross salary.
Employee’s cost to the company
Employee’s cost to company (CTC) refers to the total amount that needs to be spent by an organization to have the employee working for them for a year.
Dearness Allowance (DA)
Dearness Allowance is an allowance paid to the employees as a means to tackle the impact levied by inflation. It is calculated as a particular percentage on the employee’s basic salary and then it is added to their basic salary.
House Rent Allowance (HRA)
House Rent Allowance is an allowance paid to the employees by the organization. It is a compensation for the employee’s rented home in the workplace city. HRA, generally forms a part of the yearly CTC.
Medical Allowance (MA)
This is a fixed sum of money that the employers pay their employees so that they can meet their regular medical expenses.
Special Allowance is an amount of money given to the employees by a company so that they can meet their certain requirements. This type of allowance is exempt in some companies and is added to the basic salary.
Travel Allowance is a type of allowance paid to the employee by the employer so that the employee can meet his travel expenses. This amount is exempted from income tax.
Provident Fund Deduction
Provident Fund is a pension fund that will serve employees with payments once they exit from the job. Provident Fund Deduction is the amount of money deducted from your salary every month to contribute to your Provident Fund.
Uses of Salary Certificate
Many people often confuse salary slips with salary certificates. However, there is a considerable difference between the two documents. Salary Certificate is a pretty important document that is the proof of a particular employee’s job at an organization. It is asked for the following uses:
- For loan applications
- For certain Bank transactions
- Credit Card applications
- Tax payment
Simple Salary Certificate Format in Word
A salary certificate model includes some very essential and important information about an employee’s salary break down along with its tenure. The most simple salary certificate format could consist of the following headers:
Given below is a salary certificate sample for your better understanding:
You can find the salary certificate format in word as well as in pdf. Here are some downloadable salary slip formats for your reference:
What is the Salary Slip or Pay Slip?
A payslip or a salary slip is a legal document issued to an employee by their employer. This could be mailed to the employee or issued on paper. A salary slip consists of details of an employee’s salary such as LTA, Bonus, HRA, deductions for a month, and more. Employers legally need to issue payslips every month as proof of salary payments and deductions from the employee’s salary.
Components of Salary Slip
We can break down the components of a salary slip into two broad parts. The two columns of the given table elaborate the aforesaid two components of a salary slip:
|1. Income||2. Deductions|
|* Basic Salary
* Dearness Allowance (DA)
* House Rent Allowance (HRA)
* Conveyance Allowance
* Leave Travel Allowance (LTA)
* Medical Allowance
* Special Allowance
* Other Allowances
|* Provident Fund (PF)
* Tax Deductible at Source (TDS)
* Professional Tax
Uses of Salary Slip
Salary slips are extremely important and are essential for several purposes. These uses are listed below:
- Tax Calculation: A salary slip is needed for your income tax calculation
- Access to Facilities: Allows you to avail of several government perks like medical care.
- Getting Loans: It is extremely important in loan procedures. Your salary slip will play a major role in deciding your repayment ability and thus, your principal loan sum.
- Background Check: Salary slips are needed for background checking when you change your job or opt for higher studies
- PF Contribution: A salary slip determines the exact employee and employer contribution for provident funds.
- Evidence of Employment: Payslips serve as employment proof.
Difference Between Salary Certificate and Salary Slip
|Salary Certificate||Salary Slip|
|A salary certificate is a document that serves as certification of the salary amount on which an individual is employed in the organization.||Salary slip gives a detailed breakdown of the salary earned by an employee and the deductions made on their salary for a specific month.|
|Salary Certificate is for the entire Fiscal Year (FY).||Salary Slip is issued every month.|
Download Salary Slip Format in Excel
You can make your salary slip in minutes by taking help from the various types of salary slip formats available online. We have provided some salary slip formats in excel below:
We have jotted down the various nitty-gritties of salary slip format in excel with formula here. Go through these to prepare your own version of a salary slip or go for the salary slip format in excel file free download.
Important Components to include:
- The header should consist of the Company Name
- Details of the Employee
- Components of Salary
- Approval and other notes
Some Salary Slip Formulas:
|Particulars of Salary Slip||Respective formulas|
|Taxable Income of the employee=||Income (Gross Salary +Other Income) – Deductions|
|Total Salary Package of the employee (CTC)=||Gross Salary + PF + Gratuity|
|Gross Salary of the employee=||Basic Salary + HRA + Other Allowances|
|Net Salary of the employee=||(Basic Salary + HRA + Allowances) – (Income Tax + Employer’s PF + Professional Tax)|
Download Salary Slip Format in Word
You can also find several salary slip formats in word on the internet. We have provided some of the best salary slip formats for your reference. Check them out below:
It is your legal right to ask your company for your payslip if they don’t issue it themselves. Every company is legally bound to issue you a pay slip format periodically, but some companies give you the option of taking a print out of your payslip format. In the current digital world, many companies mail the employee’s salary slip and this is known as epay slip.
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