How to Read Your Payslip — Every Line, Decoded

Most people glance at one number on their payslip — the net pay at the bottom — and ignore everything above it. But the lines above that number are where errors hide: a wrong PF base, a TDS deduction that’s too high, a missing allowance. Reading your payslip takes five minutes and can be worth thousands a year.

Here’s what every line means, top to bottom.

All figures follow FY 2025–26 rules. Verified against incometax.gov.in and EPFO rules.

The two halves of a payslip

Every payslip has two columns or sections:

• Earnings — what you’re paid. These add up to your gross salary.
• Deductions — what’s taken out. These subtract to give your net pay.

Net pay = total earnings − total deductions. That’s the whole structure. Everything else is detail.

Earnings, line by line

Basic salary. The foundation of your pay, usually 35–50% of gross. Almost everything else is calculated from it — PF, HRA exemption, and gratuity all key off basic. A higher basic means more PF (forced savings, less take-home); a lower basic means more take-home but smaller retirement contributions.

House Rent Allowance (HRA). Typically 40–50% of basic. If you pay rent and are on the old regime, part of this is exempt from tax under Section 10(13A) — see the HRA exemption guide for the formula. Under the new regime, HRA is fully taxable.

Special allowance. The balancing figure — whatever’s left of your gross after basic, HRA, and other named components. It’s fully taxable and carries no special treatment. When your salary is “restructured,” this is usually the bucket that shrinks as other components grow.

LTA (Leave Travel Allowance). Exempt under the old regime if you actually travel within India and submit bills, twice in a four-year block. Taxable if unclaimed or on the new regime.

Other components. Food/meal allowance, conveyance, telephone or internet reimbursement, books-and-periodicals — small components, sometimes tax-advantaged under the old regime if you submit bills.

Reimbursements and bonuses. One-off lines — a performance bonus, joining bonus, or expense reimbursement — appear in the month they’re paid, which is why some payslips show a much higher gross than usual.

Deductions, line by line

Employee Provident Fund (PF / EPF). Your own contribution — 12% of basic, but most employers cap it at 12% of ₹15,000 = ₹1,800/month. This goes into your EPF account (the employer adds a matching contribution that does not appear on your payslip because it’s not deducted from your pay — it’s part of CTC). PF is the largest deduction for most people at lower salaries, bigger than income tax.

Professional tax (PT). A state levy, capped at ₹2,500/year — commonly ₹200/month. Not an income tax, not related to any professional body. Some states (e.g. Delhi) charge none.

Income tax (TDS). Tax Deducted at Source — your employer’s estimate of your monthly income tax, based on your projected annual salary and declared regime. Under the new regime (FY 2025-26), taxable income up to ₹12 lakh is effectively tax-free after the ₹75,000 standard deduction and Section 87A rebate, so at lower brackets this line should be zero. If it isn’t, check which regime payroll has assumed.

Other deductions. Voluntary PF (VPF) if you’ve opted in, NPS contributions, group insurance premiums, or loan recoveries — these vary by employer.

Gross vs net — the two totals

If your net pay looks wrong, the cause is almost always one of these four deduction lines — most often TDS (wrong regime assumed) or PF (deducted on full basic instead of the cap, or vice versa).

How to verify your PF in 2 minutes

1. Take your basic salary from the payslip.
2. Multiply by 12%. If your employer caps PF, the figure should be ₹1,800 (12% of ₹15,000).
3. Compare to the PF deduction line. They should match.
4. Confirm the contribution is actually landing: log in to the EPFO portal or the UMANG app and check your passbook. Both your contribution and the employer’s match should appear.

If the passbook is missing months, your employer deducted PF but hasn’t deposited it — follow up with payroll immediately.

Five common payslip confusions

“My employer’s PF isn’t on my payslip.” Correct — the employer’s matching 12% is part of CTC, not a deduction from your pay, so it doesn’t appear. Only your contribution shows as a deduction.

“My gross is higher this month.” A bonus, reimbursement, or arrears was paid. TDS may also spike that month to account for it.

“TDS jumped mid-year.” Common after you fail to submit investment proofs by the deadline, or after a salary revision. Payroll recalculates the full-year tax and spreads the shortfall across remaining months.

“Basic seems low.” Many employers keep basic at ~40% of gross to limit their PF and gratuity liability. It’s legal and common — it just shifts more of your pay into the taxable special allowance.

“Net pay ≠ CTC ÷ 12.” Expected — your payslip shows gross-to-net, while CTC also includes employer PF, gratuity, and variable pay you never see monthly. See CTC vs in-hand for the full gap.

→ Check your payslip against Unpakk — enter your CTC and compare the expected basic, HRA, PF, and tax against what your slip actually shows.

Quick reference