Introduction
Every month a PDF lands in your inbox and most people scroll straight to the bottom — net pay, done. The rows of components, the deduction lines, the TDS figure — all ignored. But those numbers matter more than the bottom line suggests. A wrong PF calculation can quietly cost you thousands. An employer deducting professional tax in a state that has abolished it (yes, this happens) is money you are just giving away. This breakdown covers every component on a typical Indian salary slip so you know exactly what you are looking at — and what to push back on if something looks off.
Earnings Components
1. Basic Salary
Basic salary is the core component of your pay — typically 40% of CTC. It forms the basis for calculating HRA, PF, gratuity, and other components. A higher basic means higher PF contributions but also higher taxable income.
2. House Rent Allowance (HRA)
HRA is paid to help cover rental expenses. It is usually 50% of basic (metro) or 40% (non-metro). A portion of HRA can be claimed as tax-exempt under the old regime. Calculate your exemption with our HRA calculator.
3. Special Allowance / Flexible Pay
This is the balancing amount — CTC minus basic, HRA, PF employer, and gratuity. It is fully taxable and varies by company. Some companies break it into LTA, medical allowance, and other components.
4. Other Allowances
May include: Leave Travel Allowance (LTA), Medical Allowance, Conveyance Allowance, Food Coupons, and Performance Bonus. Each has different tax treatment.
Deduction Components
1. Employee Provident Fund (EPF)
12% of basic salary is deducted as employee PF contribution. Employer also contributes 12% (part of CTC, not deducted from salary). PF is a retirement savings with ~8.25% interest. Use our PF calculator to project your corpus.
2. Professional Tax
A state-level tax capped at ₹2,500/year. Most states charge ₹200/month. This is deductible from taxable income under both old and new regimes.
3. TDS (Tax Deducted at Source)
Your employer deducts income tax monthly based on your declared investments and chosen regime. You can reduce TDS by submitting investment declarations early in the year.
4. Other Deductions
May include: loan EMIs (if company-provided), insurance premiums, canteen charges, and other recovery amounts.
Example Salary Slip — 10 LPA
| Component | Monthly (₹) | Annual (₹) |
|---|---|---|
| EARNINGS | ||
| Basic Salary | 33,333 | 4,00,000 |
| HRA | 16,667 | 2,00,000 |
| Special Allowance | 22,433 | 2,69,200 |
| Gross Salary | 72,433 | 8,69,200 |
| DEDUCTIONS | ||
| Employee PF | 1,800 | 21,600 |
| Professional Tax | 200 | 2,400 |
| TDS (New Regime) | 0 | 0 |
| Net Pay (In-Hand) | 70,433 | 8,45,200 |
See more breakdowns: 10 LPA detailed breakdown | CTC to Take-Home Calculator
What to Actually Check on Your Slip
- Add up Basic + HRA + Allowances — it should equal your Gross Salary. If it doesn't, ask payroll why.
- Check that your PF deduction is 12% of your actual basic, not some arbitrary lower number
- Look up your state's professional tax slab — some states charge less than ₹200/month, and a few have removed it entirely
- If TDS seems higher than expected, check whether you submitted your investment declarations for the year (use our TDS calculator to verify)
- Compare your gross salary to your CTC — the difference should roughly equal employer PF + gratuity + insurance. A large unexplained gap is worth querying