Salary Slip Components Explained: Basic, HRA, PF, PT and TDS

Your offer letter said ₹7.2 lakh a year. The first salary credit was less than ₹60,000, and the payslip that came with it is a grid of short labels: Basic, HRA, Special Allowance, PF, PT, TDS. It's easy to feel short-changed when you can't tell where the money went.

Here's what each line on an Indian salary slip means and how the numbers connect. If you pay a small team, you'll also see how to lay out a clean payslip with the free Salary Slip Generator.

This is general information, not tax, legal or payroll advice. Rules change, so check with your employer, a chartered accountant or the official EPFO and Income Tax Department websites before acting on any figure here.

The two halves of every payslip

Every salary slip has earnings (what your employer pays you for the month) and deductions (what's taken out before the money reaches your bank).

• Gross earnings = the total of all earnings lines.
• Total deductions = the total of all deduction lines.
• Net pay (take-home) = gross earnings minus total deductions.

The slip also carries identifying details: employer name, your employee ID, designation, pay month and paid days. Banks often ask for recent payslips, so these matter.

Earnings: what each line means

Basic salary

This is the core of your pay and the base for several other numbers, including PF and HRA. Under the Code on Wages, which came into force on 21 November 2025, "wages" are mainly basic pay, dearness allowance and retaining allowance. If those make up less than half of total pay, the shortfall is added back for calculating things like PF and gratuity. That's why many companies now keep basic at around half of gross pay.

House Rent Allowance (HRA)

An allowance meant to cover rent. If you choose the old tax regime and actually pay rent, part or all of it can be tax-exempt. The exemption is the lowest of three amounts:

1. The HRA you actually receive.
2. Rent paid minus 10% of salary (basic plus DA).
3. 50% of salary if you live in one of the listed cities, 40% elsewhere.

From April 2026, the 50% list covers eight cities: Delhi, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Pune and Ahmedabad. Under the new tax regime, HRA is fully taxable. Our guide on rent receipts for HRA exemption covers the paperwork side.

Special allowance and other allowances

Special allowance is usually the balancing figure that makes your structure add up to the agreed salary. It's fully taxable. Other lines like conveyance, LTA or bonus have their own tax rules, so don't assume a named allowance is tax-free.

Deductions: where the rest of your money goes

Provident Fund (PF)

Your share of EPF is 12% of basic plus DA, and it goes into your own PF account. It's savings, not a cost, though it does cut your take-home pay. Your employer also contributes 12%, but that usually appears in your CTC, not as a deduction on your slip.

There's an important recent change. EPFO's statutory wage ceiling rose from ₹15,000 to ₹25,000 a month, effective 17 September 2026. Some employers calculate PF on basic up to this ceiling; others use your full basic. Of the employer's 12%, 8.33% goes to the Employees' Pension Scheme on wages up to the ceiling, so the maximum monthly pension contribution is now about ₹2,083 (it was ₹1,250).

Professional Tax (PT)

A small tax charged by some states, not all. The amount depends on your state and salary slab. In Telangana, for example, it's ₹200 a month for salaries above ₹20,000. The Constitution caps it at ₹2,500 per person per year.

TDS (income tax)

Your employer estimates your tax for the full year and deducts a share each month. Under the new regime, a salaried person earning up to ₹12.75 lakh a year generally pays no tax, thanks to the ₹75,000 standard deduction and the rebate.

You may also see lines for unpaid leave, salary advances or ESI (which applies only below a certain salary level).

A worked example with real numbers

Say you work in Hyderabad and your monthly salary structure looks like this:

• Basic: ₹30,000
• HRA: ₹15,000
• Special Allowance: ₹15,000
• Gross earnings: ₹60,000 (₹7,20,000 a year, basic is exactly 50%)

Deductions, if your employer calculates PF up to the ₹25,000 ceiling:

• PF: 12% of ₹25,000 = ₹3,000
• Professional Tax: ₹200
• TDS: ₹0 (₹7.2 lakh is under the new regime's tax-free limit, assuming no other income)
• Total deductions: ₹3,200
• Net pay: ₹56,800

If your employer calculates PF on the full basic instead, PF becomes 12% of ₹30,000 = ₹3,600, and net pay drops to ₹56,200. The extra ₹600 isn't lost. It goes into your PF account.

Now the HRA side, if you're on the old regime and pay ₹20,000 rent:

• Actual HRA: ₹15,000
• Rent minus 10% of basic: ₹20,000 − ₹3,000 = ₹17,000
• 50% of basic (Hyderabad is now on the list): ₹15,000

The lowest is ₹15,000, so the whole HRA is exempt. Before April 2026, Hyderabad used the 40% rule, which would have capped the exemption at ₹12,000 a month. To try other figures quickly, the Percentage Calculator handles the 10%, 40% and 50% steps.

How to make a payslip with the Salary Slip Generator

If you run a small business or pay a few staff, here's how to produce a clean A4 payslip. The tool adds up the figures you type; it does not calculate PF, professional tax or income tax for you, so take those from your payroll records.

1. Open the Salary Slip Generator. In the Company tab, add a logo (optional), Company Name and Company Address.
2. In the Employee tab, enter the name, Employee ID, Designation and Department.
3. In the Period tab, set the pay month, Payment Date, Paid Days, Total Working Days, Payment Mode (Bank Transfer, Cheque, Cash or UPI) and currency.
4. In the Earnings tab, fill the Basic Salary and House Rent Allowance rows, then add rows for anything else, such as Special Allowance.
5. In the Deductions tab, fill Provident Fund (PF) and Professional Tax, and add a TDS row if needed. The preview updates Gross Earnings, Total Deductions and Net Pay as you type, and writes net pay in words.
6. Click Download PDF and choose Save as PDF in the print dialog. Use Save Draft if you want to reuse the details next month. The data stays in your browser.

Mistakes to avoid

• Expecting paid days to change the pay. In this tool, Paid Days and Total Working Days are printed for reference only. If someone took unpaid leave, reduce the earnings yourself. With 2 unpaid days in a 30-day month, a common approach gives ₹60,000 × 28 ÷ 30 = ₹56,000. Employers differ on calendar versus working days.
• Confusing CTC with gross. CTC usually includes the employer's PF share and other benefits that never appear as earnings on your slip.
• Claiming HRA exemption without paying rent. The exemption depends on rent you actually pay, and you may need rent receipts and the landlord's PAN for larger rents.
• Using a payslip to misstate income. A slip should reflect real pay to a real employee. False figures for a loan or visa can land you in serious trouble.

Once you know your real take-home, our post on EMI vs SIP puts loan and investment numbers side by side, and the SIP Calculator lets you test your own figures.

Frequently Asked Questions

Why is my net salary lower than my CTC divided by 12?

CTC usually includes your employer's PF share and sometimes gratuity or annual bonuses. Then your own PF, professional tax and TDS come out of gross pay.

Do I get HRA exemption under the new tax regime?

No. It's available only under the old regime, and only if you actually pay rent. Under the new regime, HRA is fully taxable.

Why does my payslip show no professional tax?

Not every state levies professional tax, and lower salary slabs may be exempt. Your state's tax department publishes the current slabs.

Does the Salary Slip Generator calculate PF and TDS automatically?

No. It totals the earnings and deductions you enter, calculates net pay and writes it in words. You enter PF, professional tax and TDS amounts from your own payroll records.