APRIL 17, 2025
What your salary slip is not telling you
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Your salary slip holds more than just your take-home pay. Let us decode the hidden components like HRA, PF, cess, and deductions that impact your earnings.
House Rent Allowance (HRA) is paid by employers to help cover housing expenses. It also offers income tax benefits if you live in a rented home.
HRA
Provident Fund (PF) is typically a deduction equal to 12% of your basic pay. It is matched by your employer, grows tax-free, and builds your long-term retirement savings.
Provident Fund (PF)
Only your PF contribution qualifies for tax deduction. A portion of your employer’s share is diverted to the pension scheme, not added to your EPF.
Employer PF vs Employee PF
Professional tax is a small, mandatory deduction by state governments. The amount varies by state and is based on your monthly salary slab.
Professional Tax
Standard deduction is a flat ₹50,000 reduction from your taxable salary. It’s auto-applied during tax filing, though not shown on your payslip.
Standard deduction
Cess is an extra 4% tax on your total income tax. It funds health and education and is added after tax calculation. It is not shown as a separate salary deduction.
Cess
Gratuity is a lump sum paid by your employer when you complete 5 years in service. It is a retirement benefit, not part of your monthly pay.
Gratuity
Gross salary includes all earnings before deductions. Net salary is your take-home pay after taxes, PF, and other deductions.
Gross vs net salary
There are deductions you can claim, like HRA, 80C, and 80D, which reduce your taxable income. These may not appear on your salary slip but can be claimed during tax filing.
Deductions you can claim
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