Problem
Indian labour law requires specific salary components and deductions on employee pay documents. Missing mandatory fields like PF or professional tax creates compliance risk during audits.
Related product paths
Step-by-step
- 1
Structure salary components correctly
Break down the CTC into basic salary (typically 40-50% of CTC), HRA, dearness allowance, special allowance, and other applicable components.
- 2
Configure statutory deductions
Set up Employee Provident Fund (12% of basic), ESI (if applicable — for wages under Rs 21,000/month), professional tax (varies by state), and TDS based on the employee's tax slab.
- 3
Add employer contributions
Include employer PF contribution (12% of basic), employer ESI (3.25% if applicable), and gratuity provision where relevant.
- 4
Apply state-specific rules
Professional tax rates and slabs vary by state. Maharashtra, Karnataka, and other states have different monthly caps. Configure the correct rate for your employee's state of employment.
- 5
Generate and distribute
Generate the salary slip as a PDF and deliver it to the employee via email or the employee portal. Retain a copy for your records.
Indian salary slips need to show more than just gross and net pay. Between Provident Fund, ESI, professional tax, and income tax (TDS), there are several mandatory components that must appear on every pay document.
Getting these wrong is not just an employee relations issue — the Employees' Provident Fund Organisation (EPFO) and Income Tax Department can audit your records, and incomplete salary slips create unnecessary risk.
What Indian labour law requires
While there is no single central format mandated for salary slips, the following are effectively required by various statutes:
| Component | Source law | What it covers |
|---|---|---|
| Basic salary | Payment of Wages Act | Core compensation |
| HRA | Income Tax Act (for exemption claims) | House rent allowance |
| PF deduction | EPF Act 1952 | 12% of basic from employee |
| Employer PF | EPF Act 1952 | 12% of basic from employer |
| ESI | ESI Act 1948 | 0.75% employee + 3.25% employer (if wages < Rs 21,000/month) |
| Professional tax | State-specific acts | Varies (max Rs 2,500/year in most states) |
| TDS | Income Tax Act | Based on employee's declared regime and investments |
State-wise professional tax rates
Professional tax is levied by state governments. Key differences:
| State | Monthly cap | Slab structure |
|---|---|---|
| Maharashtra | Rs 2,500/year | Rs 0-175 depending on salary bracket |
| Karnataka | Rs 2,400/year | Rs 0-200 depending on salary bracket |
| West Bengal | Rs 2,500/year | Rs 0-200 depending on salary bracket |
| Tamil Nadu | Rs 2,500/year | Half-yearly payment |
| Telangana | Rs 2,500/year | Rs 0-200 depending on salary bracket |
| Gujarat | Rs 2,500/year | Rs 0-200 depending on salary bracket |
Note: Some states (like Rajasthan and Delhi) do not currently levy professional tax.
New Tax Regime vs Old Tax Regime
TDS calculation depends on whether the employee has chosen the new or old tax regime. As of FY 2025-26:
New Regime (default):
- No HRA, LTA, or 80C deductions
- Lower slab rates
- Standard deduction of Rs 75,000
Old Regime (optional):
- HRA exemption, 80C (up to Rs 1.5 lakh), 80D, and other deductions available
- Higher slab rates but potentially lower tax after deductions
Your salary slip should reflect the correct TDS based on the employee's chosen regime and declared investments.
How CleverSlip helps
CleverSlip's India template includes all standard salary components: basic, HRA, DA, special allowance, PF, ESI, professional tax, and TDS. The salary slip generator produces clean PDF documents that show every component clearly, making them suitable for bank loan applications and compliance records.
Next step
Generate Indian salary slips with CleverSlip
Use the India template with pre-configured PF, ESI, professional tax, and TDS fields.
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