Your Payslip Explained

More often than not, we don’t understand most of the components in our salary slips. Nikita Sawant provides a guide to decipher it, so you know where your money’s at.

- Nikita Sawant

The text message at the end of every month telling us our salary has been credited is quite possibly the most awaited message. You get to plan a holiday that might just materialise this time around; move things from your wishlist into the cart (finally!) on your favourite shopping website, and generally try to set your life in order before it goes back to broke-land halfway through the next month. Of course, when you take a look at your pay slip and all the monetary deductions therein, you feel like the universe is playing a cruel joke on you. What are all those deductions? What’s CTC, and what on earth does HRA mean?

Firstly, understand what your cost to company, or CTC, entails. It is essentially the total amount your employer spends on you in a year. Take the case of Devanshi Sikka*, a 24-year-old content writer with a leading travel portal. Her CTC is `3,98,664 per annum, roughly `31,640 per month, but the actual amount she gets to take home is much lower. Chartered accountant Dhaval Sawant explains, “Your CTC will include everything your company pays you or for you. It includes the basic salary, benefits such as provident fund, and other allowances like medical reimbursements, reimbursements for your phone bill, etc. The CTC is the total of all the benefits, plus your salary.”

While the salary breakup varies from organisation to organisation, the following components remain the same. Below, we explain the commonest salary components:

EARNINGS Basic