How to read your payslip: every line explained
By the True HR editorial team · Reviewed by empanelled labour law lawyers
Published · Updated · 8 min read
The short answer
Your payslip has two halves. Earnings: basic, HRA, special allowance and any variable pay. Deductions: your 12% PF on wages up to the ₹25,000 ceiling, ESI at 0.75% if your wages are ₹21,000 or below, Professional Tax by state, and TDS on your projected annual income. Net pay is simply earnings minus deductions, and every line should be checkable.
What are the two halves of a payslip?
Every payslip, whatever the software that printed it, is the same simple equation. On the left (or on top) sit your earnings: the money your employer is paying you this month. On the right (or below) sit your deductions: the money taken out before it reaches your bank. Earnings add up to gross salary. Gross minus deductions is net pay, the figure that should match your bank credit to the rupee.
That is the whole trick to reading a payslip: check that each earnings line matches your offer letter, check that each deduction line follows a rule you can verify, and check that the arithmetic holds. The sections below walk through every line in that order.
What do the earnings lines on a payslip mean?
Most Indian payslips carry three to five earnings lines. Basic is the anchor of the structure, and HRA (House Rent Allowance) is usually set as a percentage of it, typically 40% to 50%; HRA becomes tax-relevant only if you pay rent and choose the old tax regime. Special allowance is the balancing figure that makes the structure add up to your agreed gross. Since the Code on Social Security took effect on 21 November 2025 the split also matters for your deductions: PF, ESI and gratuity are computed on wages, and allowances can be left out of wages only up to half of your total pay. Variable pay or incentive appears only in the month it is actually paid out, which is why some months look fatter than others.
| Earnings line | What it is | Why it matters |
|---|---|---|
| Basic | The fixed core of your salary, usually 40% to 50% of gross | Part of wages for PF, ESI and gratuity; HRA is usually a percentage of it |
| HRA (House Rent Allowance) | Housing allowance, typically 40% to 50% of basic | Partly tax-exempt under the old regime if you pay rent; left out of wages |
| Special allowance | The balancing figure to reach your agreed gross | Fully taxable; allowances can stay out of wages only up to half of total pay |
| Variable pay / incentive | Performance-linked amount, paid monthly, quarterly or annually | Appears only in payout months; taxed in the month received |
What are the deduction lines on your payslip?
Deductions are where payslips confuse people, because each line follows a different law. Employee PF (Provident Fund) is 12% of your wages under the Code on Social Security, 2020 and the Employees' Provident Funds Scheme, 2026. Wages start with basic pay and dearness allowance; HRA, conveyance, overtime and similar heads are left out, but only up to half of your total pay, so wages are never less than half of what you are paid. The contribution is compulsory on wages up to ₹25,000 a month, the ceiling in force from 17 September 2026, which makes ₹3,000 the usual deduction once your wages reach it. You and your employer can jointly opt to contribute on wages above the ceiling.
ESI (Employees' State Insurance) is 0.75% of wages, but only when your wages are ₹21,000 a month or below; above that, the line should not appear at all. Because wages can be lower than gross pay, an employee with gross pay of up to ₹42,000 can now be inside ESI. PT (Professional Tax) is a small state-level tax: in Karnataka it is ₹200 a month once your monthly salary reaches ₹25,000, with ₹300 in February, and nil below that. TDS (Tax Deducted at Source) under section 392 of the Income-tax Act, 2025 (earlier section 192) is your employer's estimate of your annual income tax, divided across the remaining months of the tax year.
| Deduction | Rate or amount | When it applies |
|---|---|---|
| Employee PF | 12% of wages, up to the ₹25,000 ceiling (₹3,000); more only by joint option | Almost all employees of covered establishments |
| ESI | 0.75% of wages (employer pays 3.25% separately) | Only when wages are ₹21,000 a month or below |
| Professional Tax (Karnataka) | ₹200 a month, ₹300 in February | Monthly salary of ₹25,000 or more; nil below |
| TDS (section 392) | Your projected annual tax spread across the year | When projected annual tax is more than nil |
Why is employer PF not shown on your payslip?
Your employer also contributes 12% towards PF, but that contribution is not your earning this month, so it never appears in the earnings column. It sits inside your CTC (Cost to Company) and goes straight into your EPF account. The same is true of the gratuity provision and any employer NPS contribution.
This is the single most common payslip confusion: people divide CTC by 12, compare it with net pay, and feel short-changed. The gap is not a mistake; it is money parked in your name (PF, gratuity, NPS) plus the deductions above. You can verify the employer PF is actually reaching you by checking your EPFO passbook at passbook.epfindia.gov.in against your payslip months.
What does a ₹50,000 payslip look like, line by line?
Here is a complete worked example for a ₹50,000 gross monthly salary in Karnataka, with a standard structure of basic at 40% of gross and HRA at 40% of basic. Wages can never be less than half of total pay, so here they are at least ₹25,000. That is the PF ceiling, so PF is 12% of ₹25,000 however your employer classifies the special allowance. At a lower salary the classification can change the PF line, so ask payroll which pay heads they count as wages.
Note the two lines that are correctly absent: ESI does not apply because wages of at least ₹25,000 are above the ₹21,000 ceiling, and TDS is nil because an annual salary of ₹6,00,000 falls to ₹5,25,000 after the ₹75,000 standard deduction, which is fully covered by the rebate under section 156 (earlier 87A) in the new regime. In February the Professional Tax line reads ₹300 and net pay is ₹100 lower.
| Line | Amount (monthly) | How it is worked out |
|---|---|---|
| Basic | ₹20,000 | 40% of gross in this structure |
| HRA | ₹8,000 | 40% of basic |
| Special allowance | ₹22,000 | Gross minus basic minus HRA (₹50,000 - ₹20,000 - ₹8,000) |
| Gross earnings | ₹50,000 | Sum of the three lines above |
| Employee PF | ₹3,000 | 12% of the ₹25,000 ceiling; wages here are at least ₹25,000 |
| ESI | Nil | Wages of at least ₹25,000 are above the ₹21,000 ceiling, so ESI does not apply |
| Professional Tax (Karnataka) | ₹200 | Monthly salary is ₹25,000 or more (₹300 in February) |
| TDS | Nil | Annual ₹6,00,000 is tax-free under the new regime after the rebate |
| Total deductions | ₹3,200 | ₹3,000 PF plus ₹200 PT |
| Net pay | ₹46,800 | ₹50,000 gross minus ₹3,200 deductions |
What should you check on your payslip every month?
Five minutes a month is enough. Run this checklist when the salary credit lands, and raise anything odd the same week while the payroll team can still fix it in the next cycle.
- Net pay on the payslip matches the bank credit exactly, and it arrived on the promised date
- Basic and HRA match your offer letter or the latest revision letter
- PF equals 12% of your wages, or ₹3,000 once wages reach the ₹25,000 ceiling, and the same amount shows in your EPFO passbook within a month or two
- ESI appears only if your wages are ₹21,000 or below, and at 0.75% of wages
- PT matches your state's slab (₹200 in Karnataka from a ₹25,000 salary, ₹300 in February)
- TDS matches the regime and investment declaration you submitted, and your Annual Information Statement on the income tax portal shows the same TDS each quarter
- Reimbursements, incentives and arrears promised for this month actually appear
Where do you complain if your payslip is wrong?
Start inside: write to payroll or HR with the specific line, the amount you expected and why. Keep it in email so there is a record. Most errors are fixed in the next payroll run.
If PF deducted from you is not reaching your EPF account, raise a grievance on the EPFO's EPFiGMS portal (epfigms.gov.in); deducting PF and not depositing it is an offence under the Code on Social Security. For ESI issues, contact your ESIC branch office. For unpaid or delayed wages, the state labour department can act under the Code on Wages, 2019. For TDS that appears on your payslip but not in your Annual Information Statement, ask the employer to correct their TDS statement first; the income tax portal's grievance system is the escalation. Keep every payslip and bank statement; they are your evidence.
Sections and Acts cited
- Code on Social Security, 2020: provident fund, ESI and the definition of wages in section 2(88)
- Employees' Provident Funds Scheme, 2026
- Karnataka Tax on Professions, Trades, Callings and Employments Act, 1976
- Income-tax Act, 2025, section 392 (earlier section 192 of the 1961 Act)
- Code on Wages, 2019
Frequently asked questions
01Is my employer required to give me a payslip?
Yes. Wage rules require employers to give every employee a wage slip showing earnings and deductions, and in practice every organised employer issues one monthly, on paper or in an HR portal. If you are not getting one, ask HR in writing; you need payslips for loans, visas, tax filing and PF claims.
02Why is employer PF in my CTC but not on my payslip?
Because it is a cost your employer pays into your EPF account, not a payment to your bank this month. Payslips show only what is paid and deducted now. Check your EPFO passbook to confirm both your 12% and the employer's 12% are being deposited.
03Why does no ESI show on the ₹50,000 sample payslip?
ESI applies only when monthly wages are ₹21,000 or below. On the ₹50,000 sample, wages are at least ₹25,000, half of total pay, so you are outside ESI and no 0.75% deduction should appear. At lower salaries it is different: with gross pay of up to ₹42,000, wages can be ₹21,000 or less, and ESI may apply even though gross pay is above the ceiling.
04Why did my TDS suddenly jump mid-year?
Salary TDS (section 392, earlier 192) is a running estimate. If you received an increment, a bonus, or missed submitting investment proofs by the December to January deadline, your employer recalculates the year's tax and recovers the shortfall over the remaining months, so the monthly TDS rises.
05Can my employer deduct PF on more than ₹25,000 of wages?
Yes, if you and your employer opt for it jointly. Contribution is compulsory on wages up to ₹25,000 a month, which gives ₹3,000; above that it needs a joint option under the Employees' Provident Funds Scheme, 2026. Your CTC sheet states which applies to you.
06Why did my PF deduction go up in late 2026?
The wage ceiling for PF rose from ₹15,000 to ₹25,000 a month on 17 September 2026, and PF is now computed on wages as the Code on Social Security defines them rather than on basic alone. For many employees the deduction moved from ₹1,800 to ₹3,000 a month. The money is still yours: it sits in your EPF account with your employer's matching share.
07What is the difference between gross salary and net salary?
Gross is the total of your earnings lines before any deduction. Net, or in-hand, is gross minus PF, ESI (if applicable), Professional Tax and TDS: the amount actually credited to your bank. On the ₹50,000 sample, gross is ₹50,000 and net is ₹46,800.