Most people look at one number on their payslip. The rest of it is treated as something HR handles. That is fine until a deduction changes, a PF passbook does not update, or Form 16 shows something the payslips did not — and then nobody can explain what happened, because nobody has read the document properly.
An Indian payslip has three parts: earnings, deductions, and net pay. Earnings are your structure. Deductions are what the law and your employer take out. The lines worth checking every month are PF, professional tax and TDS, because those are the ones that go wrong quietly.
Not sure your deductions are right? WhatsApp us a payslip and we will walk you through it.
Quick Summary — The Standard Lines
| Line | What it is | Worth checking |
| Basic | Core salary, drives most calculations | Should be at least half of total pay |
| HRA | House rent allowance | Exemption depends on rent actually paid |
| Special allowance | Balancing figure | Large special allowance means low basic |
| PF (employee) | 12% of PF wages | Should appear in your UAN passbook |
| Professional tax | State levy | Small, fixed by state slab |
| TDS | Income tax deducted | Should tally to Form 16 |
The Earnings Side
Basic pay. The most important line, because PF, gratuity and several allowances are calculated on it. Under the Code on Social Security, 2020, basic should be at least half of total remuneration. A payslip with a very small basic and a very large allowance is a structure built to reduce statutory cost, and it is the arrangement the wage definition was written to address.
House rent allowance. An allowance you receive whether or not you rent. The tax exemption is separate — it depends on rent actually paid, your basic, and your city. Receiving HRA is not the same as claiming the exemption.
Special allowance. Usually the balancing figure that makes the total add up. Fully taxable, and it counts towards remuneration for the basic-pay test.
Other allowances. Conveyance, medical, education, meal cards. Each has its own tax treatment, and most have narrower exemptions than employees assume.
The Deductions Side
Provident fund. Twelve per cent of PF wages from you, matched by your employer, on wages up to the ₹15,000 ceiling. Your contribution appears on the payslip. Your employer’s usually does not, though it is part of your cost to company.
The check that matters: log into the EPFO member portal with your UAN and confirm the amount deducted actually reached your account. A deduction on a payslip is not proof of a deposit.
ESIC. If your gross is up to ₹21,000 a month, 0.75% from you and 3.25% from your employer. Above that ceiling it does not apply.
Professional tax. A state levy, small and fixed by slab. Maharashtra, Karnataka, West Bengal and several others charge it. Some states do not charge it at all.
TDS. Income tax deducted on your estimated annual income, spread across the year. This is why it changes — a bonus, a revised declaration, or a regime change all recalculate it. At year end it should reconcile to your Form 16 and your Form 26AS.
Other deductions. Loan recovery, notice pay, insurance premiums. These are contractual rather than statutory, and you should be able to trace each to something you agreed.
Net Pay
Gross earnings minus total deductions. The number people actually read.
Worth knowing: net pay changing month to month is usually TDS, not an error. TDS recalculates when your projected annual income changes, so a bonus in one month typically raises deductions for the rest of the year.
Four Checks Worth Doing
Is basic at least half of your total? If not, ask. It affects PF, gratuity and your eventual retirement balance.
Does your PF passbook match your payslips? Check quarterly on the EPFO portal. This is the single most useful check on this list.
Does your TDS tally to Form 26AS? Compare annually. If your payslips show more TDS than 26AS reflects, something did not reach the department.
Is your UAN on the payslip? It should be, where PF applies. Without it you cannot track your own contributions.
What CTC Is Not
Cost to company includes the employer’s PF contribution, gratuity provision, insurance and sometimes a bonus estimate. None of those appear as take-home.
The gap between CTC and net pay is normally substantial and entirely legitimate. It becomes a problem only when nobody explained it at the offer stage, which is where most salary disputes actually start.
Frequently Asked Questions
Why is my take-home lower than the CTC I was offered?
CTC includes employer contributions and provisions that never reach your bank account. The gap is normal; the surprise is not.
My payslip shows PF deducted but my passbook has not updated. What now?
Raise it immediately. A deduction shown is not a deposit made, and the sooner it is queried the easier it is to fix.
Why does my TDS change every month?
It is calculated on projected annual income. A bonus, a revised declaration or a regime change all recalculate the remaining months.
Is professional tax the same everywhere?
No. It is a state levy with different slabs, and some states do not charge it at all.
Should HRA appear if I do not pay rent?
It can appear as an allowance regardless. The exemption is separate and requires rent actually paid.
How do I check my Form 16 against my payslips?
Add up the TDS on twelve payslips and compare to Form 16 Part A, then to Form 26AS. All three should agree.
References
- Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 — contribution rates and wage ceiling
- Employees’ State Insurance Act, 1948 — wage ceiling and contribution rates
- Code on Social Security, 2020 — definition of wages
- Income Tax Act, 1961 — Sections 10(13A), 192 and Form 16 requirements
⚠️ Rates, ceilings and state professional tax slabs change through notification. Confirm current figures before relying on any number here.
Related Reading: Salary Structure Design: How to Split CTC Correctly · Your First Payroll Run in India: What Usually Goes Wrong · Form 16 and 16A Not Matching TRACES: How to Fix It
Call or WhatsApp: +91 7448200422 Email: info@taxkitab.com Our Academy covers payroll end to end — structure, PF, ESIC, TDS and the labour codes. For businesses, we run payroll under Payroll & HR Compliance.
