What are the Payslip components and their importance
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For any employee, it is important to understand the various components present in the salary slip and this will help in understanding his salary and know the net salary of the employee. Here we are presenting a government employee pay details who is working in BSNL shown in their ERP ESS portal.
The various components of the pay slip available are
Remuneration: This is the total remuneration paid by the employer which includes the income and the allowance payable by the employer. This is the gross income of the employee and is also used to calculate the tax liability of the employee.
Net Pay: An employee’s net pay is the cash amount, it is the net amount that the employee will receive at the end of each day after deducting the tax amount from the gross salary.
Income: Income is the amount of money owed by the employer to the employee in exchange of the services he has done for the company. Income is reported under the section 3601 and all the incomes are reported under this section. Certain types of income, such as commission and annual payments, will also be reported under different codes, so it is recommended t use system items wherever possible.
Allowance: An allowance is the amount of money that the employee needs to pay to the employer for business related expenditure on behalf of the employer. Usually all the expenditures are fully taxable and are reported under the code 3713.
However certain allowances are treated separately and involves special taxes. All the taxes in the allowances should fall under SARS’s requirement.
The allowances such as a special uniform to work fall under tax free allowances and fall under the code 3714.
Benefit: This is the monetary value of any gift which is given by the employer to the employee on virtue of the good services or work done by the employee. The value of all the benefits that an employee receives are fully taxable and forms the component of the gross salary. The benefits are reported under section 3801.
Benefit: This is the monetary value of any gift which is given by the employer to the employee on virtue of the good services or work done by the employee. The value of all the benefits that an employee receives are fully taxable and forms the component of the gross salary. The benefits are reported under section 3801.
The allowances such as a special uniform to work fall under tax free allowances and fall under the code 3714.
However certain allowances are treated separately and involves special taxes. All the taxes in the allowances should fall under SARS’s requirement.
Allowance: An allowance is the amount of money that the employee needs to pay to the employer for business related expenditure on behalf of the employer. Usually all the expenditures are fully taxable and are reported under the code 3713.
Income: Income is the amount of money owed by the employer to the employee in exchange of the services he has done for the company. Income is reported under the section 3601 and all the incomes are reported under this section. Certain types of income, such as commission and annual payments, will also be reported under different codes, so it is recommended t use system items wherever possible.
Certain benefits have particular tax treatment and / or different IRP5 codes and, as such, are included as system items on SimplePay. The following common benefits have system items
- Employer Loan
- Company Car (use of a motor vehicle)
- Medical Aid contributions paid by the employer
- Pension, Provident and Retirement Annuity Fund contributions paid by the employer
Taxable Income deduction: Employees are also entitled to certain reductions in the taxable income. Taxable income deductions are subtracted from an employee’s remuneration to calculate the amount on which their tax liability will be calculated. These are, therefore, deductions from gross pay and must be distinguished from normal deductions. Retirement savings are the most important reason towards the taxable income deductions.
Employer contribution: These are the contributions that the employer is required to pay towards the employee savings, these are not part of employee’s salary and the employer is required to pay them as per the laws of the country.
Reimbursement: Reimbursement of business-related expenditure happens when an employee has incurred and paid for business-related expenses on behalf of an employer, without being given an allowance or an advance, and is subsequently repaid for the exact expenditure. The employee is required to submit supporting documentation in the form of receipts.