How to Read a Pay Stub, and an Indian Salary Slip

Twenty-one Indian pages explaining the salary slip were checked while writing this. Four of them cite the Payment of Wages Act, 1936 as the law that entitles you to one. That Act was repealed on 21 November 2025.

Two pages name the current law. Most name nothing at all.

The document itself is the most-read financial statement in anyone's life and the least explained. It arrives every month, it is the only place your employer states in writing what it paid you and what it took, and almost nothing written about it tells you what the law requires it to contain or whether the numbers on it are supposed to add up.

What is a pay stub, and what is a salary slip?

A pay stub is the statement an employer issues alongside a salary payment, recording what was earned in the period, what was deducted from it, and what was actually paid. In India the same document is called a salary slip or a payslip, and it carries a few items a US stub never does.

The structure is identical in both countries. Earnings on one side, deductions on the other, and a net figure at the bottom that should match the amount that reached the bank.

What differs is the content. An Indian slip splits earnings into basic pay, dearness allowance, house rent allowance and a set of other allowances, because Indian tax law treats several of those differently. A US stub usually shows a rate, hours and a gross figure without that split, since the split carries no tax consequence there.

	Indian salary slip	US pay stub
Earnings shown as	Basic, DA, HRA, allowances	Rate, hours, gross
Retirement line	EPF, employee's 12%	401(k) if enrolled, voluntary
Payroll taxes	None as such	FICA, split into OASDI and Medicare
State levy	Professional tax, where it applies	State income tax, where it applies
Income tax line	TDS	Federal and state withholding
Legally required?	Yes	No, except under state law

That last row surprises most people, and it runs the opposite way to what you would expect.

Is an employer legally required to give you one?

In India, yes, and the obligation is recent. Section 50(3) of the Code on Wages, 2019 says that every employer shall issue wage slips to the employees in such form and manner as may be prescribed. The Code on Wages (Central) Rules, notified on 8 May 2026, prescribe the format as Form V, issued electronically or on paper, on or before the payment of wages.

Form V has named fields: the employee's name, designation, universal account number, bank account number, the wage period, the rate of wages broken into basic, dearness allowance and other allowances, total attendance, overtime wages, gross wages, total deductions split into provident fund, employees' state insurance and others, and net wages paid.

Two corrections are worth making, because both errors are live on pages ranking for this topic. The section is 50(3), and not section 33, which deals with the computation of available surplus for bonus and has nothing to do with payslips. And the Act that used to carry this duty, the Payment of Wages Act, 1936, was repealed by section 69 of the Code on Wages with effect from 21 November 2025, along with the Minimum Wages Act, 1948, the Payment of Bonus Act, 1965 and the Equal Remuneration Act, 1976.

In the United States, no. The Department of Labor states plainly that the Fair Labor Standards Act does require employers to keep accurate records of hours worked and wages paid, but does not require an employer to provide employees pay stubs.

What federal law requires instead is record-keeping, under 29 CFR Part 516. An employer must retain fourteen items for each non-exempt worker, including hours worked each day, total hours each week, the basis of pay, the regular hourly rate, all additions to and deductions from wages, total wages per pay period and the date of payment. Payroll records are kept three years and the underlying wage-computation records, such as time cards, two years. The regulation prescribes no particular form.

So the US requirement is that the employer can prove the numbers, and the Indian requirement is that the employee is handed them. American pay stub rules exist, but they come from individual state law, which is why the answer changes when someone moves state.

What do the deduction lines on an Indian salary slip mean?

EPF is the employee's own contribution to the provident fund, fixed at 12% of wages by paragraph 18(2) of the Employees' Provident Funds Scheme, 2026. It is calculated on a statutory wage ceiling of Rs 15,000 a month, which the government re-notified on 29 May 2026 under the Code on Social Security, so the minimum contribution is Rs 1,800.

An employer may contribute on the full basic salary instead of the ceiling, and many do. That single choice is why two people on identical salaries at different companies show different EPF lines. Proposals to raise the ceiling to Rs 21,000 or Rs 25,000 have been widely reported, but no notification has been issued, so Rs 15,000 is still the number in force.

ESI is the employees' state insurance contribution, deducted at 0.75% from the employee with the employer paying 3.25%, both rates effective from 1 July 2019. It applies to employees earning up to Rs 21,000 a month, and up to Rs 25,000 for a person with a disability. One thing has quietly changed here: since 21 November 2025 that threshold is tested against the Code's definition of wages, which is basic plus dearness allowance and retaining allowance, and excludes house rent allowance, conveyance, overtime, commission and bonus. Pages that still say "Rs 21,000 gross" are describing the old test.

The pattern here is the same as the one in the intro. The Employees' Provident Funds Scheme, 1952, the Employees' Pension Scheme, 1995 and the Employees' State Insurance Act, 1948 have all been remade under the new Codes, so a payroll page naming any of them is citing a superseded instrument, even where its rupee figures happen to still be right.

Professional tax is a state levy on employment, and Article 276(2) of the Constitution caps it at Rs 2,500 per person per year. That ceiling was set by the Constitution (Sixtieth Amendment) Act, 1988, which raised it from Rs 250 with effect from 20 December 1988.

Whether it appears on a slip at all depends entirely on the state, and the lists circulating on payroll sites contain a specific error worth knowing about.

State	Professional tax on salary?	Evidence
Punjab	Yes, Rs 200 a month	State Development Tax Act, 2018
Delhi	No	Head 0028 absent from state accounts
Haryana	No	Head 0028 absent from state accounts
Uttar Pradesh	No	Head 0028 absent from state accounts
Uttarakhand	No	Head 0028 absent from state accounts
Himachal Pradesh	No	Its 2005 Act was repealed
Rajasthan	Not in practice	Act unrepealed, no rate notified

Punjab is the one that catches people out. Several payroll pages list it among the states with no professional tax. It levies Rs 200 a month, Rs 2,400 a year, under the Punjab State Development Tax Act, 2018, expressly under Article 276, with employer deduction and a live registration portal. The state collected Rs 167.58 crore under it in 2023-24. The reason it gets missed is the name: a search for legislation about "professions, trades, callings and employments" does not return an Act called a Development Tax.

The five states in the table with no levy are confirmed the strongest way available for a negative, which is that the Comptroller and Auditor General's accounts for each state enumerate every revenue head the state actually received money under, and head 0028, taxes on professions, trades, callings and employment, is absent from all five.

Rajasthan is the honest edge case. Its Act of 2000 is still on the statute book and sets no rate itself, leaving the charge inoperative, and the state books a token Rs 1.75 lakh a year against that head. So no deduction reaches a payslip, though "Rajasthan has no professional tax law" overstates it.

TDS is tax deducted at source, the employer's estimate of your annual income tax spread across twelve months. It is an estimate, which is why it can change mid-year when an investment declaration is submitted or a bonus is paid.

Why does the slip never add up to your CTC?

Because CTC counts what the employer spends and the slip records what the employer pays you. Those are different measurements of the same job.

The gap is made of employer-side money: the employer's own 12% provident fund contribution, gratuity accruing against future service, the premium on any employer-paid insurance, and the employer's 3.25% state insurance share where it applies. Every one of those sits inside CTC. None appears on the slip as an earning, and none is deducted from your gross.

Worth being precise about a mistake that is printed as a worked example on at least one page ranking for this topic. It shows the employer's provident fund share on the deductions side, reducing net pay. That is wrong twice over: the money is not deducted from the employee, and it was never in the employee's gross salary to begin with. Anyone reconciling their own slip against that example would come out short.

Our post on gross versus net income works through the whole CTC to take-home chain with a full monthly breakdown, and the take-home salary calculator runs it against a real CTC figure with the regime choice and professional tax built in.

There is a second reason the numbers moved recently. Since 21 November 2025 the Code on Wages requires basic pay plus dearness allowance to be at least half of total pay, which pushes more of a package into provident fund and gratuity. We cover what that does to monthly cash in how the new Labour Code changes take-home pay.

What changed for meal cards and gift vouchers in 2026?

Two of the small perquisites that show up in an Indian package got much larger limits from Tax Year 2026-27, under Rule 15 of the Income-tax Rules 2026.

Perquisite	1962 Rules	Rule 15, Rules 2026
Free meals during working hours	Rs 50 per meal	Rs 200 per meal
Gifts and vouchers, per year	nil below Rs 5,000	nil below Rs 15,000

The meal limit covers food and non-alcoholic beverages given during working hours, either at the office or business premises or through paid vouchers usable only at eating joints. Rule 15 also leaves tea and snacks during working hours outside the valuation altogether, along with free food in a remote area or on an off-shore installation. This is the rule behind the meal card in your package, and it is why a meal card is worth more to you than the same money paid as salary.

One word in the gift rule is worth reading slowly. It values a gift or voucher at the amount of the gift, then says the perquisite is nil if the value is below Rs 15,000 in aggregate during the tax year. Below, not up to. A gift total landing exactly on Rs 15,000 is outside the nil valuation, and several summaries of this change print it the looser way.

Both figures apply to salary paid from 1 April 2026. The slip you are reconciling for FY 2025-26 still runs on the old limits, because that year falls under the 1961 Act.

What changed for the children's education and hostel allowances?

Both went up by a lot more than the meal and gift limits, and they sit in a different rule. Rule 280 of the Income-tax Rules 2026 sets them, under Schedule III of the Act.

Allowance	1962 Rules	Rule 280, Rules 2026
Children's education	₹100 per month per child	₹3,000 per month per child
Hostel expenditure	₹300 per month per child	₹9,000 per month per child

Both are capped at two children, and both are stated by the rule as a monthly amount per child rather than a single household figure. The hostel one is the larger change by some distance: thirty times the old limit, against thirty for education and four for meals.

The rule split is worth holding on to, because it is why these move separately from the meal and gift limits above. Rule 15 values perquisites, meaning things the employer provides in kind. Rule 280 sets exemption limits on allowances, meaning cash the employer pays you that is labelled for a purpose. A meal card is a perquisite. A line on your payslip reading "children's education allowance" is an allowance. They are different instruments in different rules, which is why a page that lists all four limits together without saying so will eventually update one set and not the other.

Two neighbouring figures in the same Rule 280 table, since payslips carry them and almost nothing explains them: transport allowance for an employee of a transport system running from place to place is exempt at 70% of the allowance up to ₹25,000 a month, and the counter-insurgency allowance for armed forces personnel posted away from their permanent location is ₹22,000 a month.

As with the perquisites above, these are Tax Year 2026-27 figures and apply to salary paid from 1 April 2026.

What do the deduction codes on a US pay stub mean?

FICA covers the two federal payroll taxes, Social Security and Medicare, and the two behave differently enough that reading them as one number hides something useful.

Social Security, often labelled OASDI on a stub, is 6.2% of earnings up to a yearly ceiling. That ceiling rose to $184,500 for 2026, from $176,100 in 2025, announced by the Social Security Administration on 24 October 2025. Once earnings pass it the deduction stops for the rest of the year, which is why a high earner's take-home quietly rises in the autumn without any raise.

Medicare is 1.45% and has no ceiling at all, so it continues on every dollar earned. Above $200,000 for a single filer, or $250,000 for a married couple filing jointly, an extra 0.9% Additional Medicare Tax applies. That one is employee-only, with no employer match, and an employer must start withholding it above $200,000 of wages regardless of the filing status the employee actually uses.

US stub code	What it is	2026 figure
FICA-SS, OASDI, SS	Social Security tax	6.2% up to $184,500
FICA-MED, MED, HI	Medicare tax	1.45%, no ceiling
ADDL MED	Additional Medicare Tax	0.9% above $200,000 single
FED, FIT, FITW	Federal income tax withheld	Set by your W-4
ST, SIT, SWT	State income tax withheld	Varies by state
YTD	Year to date total	Accumulates all year

The codes vary by payroll provider, which is the real reason this is confusing. There is no standard abbreviation set, so the same deduction can appear as FICA-SS at one employer and OASDI at the next.

What is the year-to-date column, and does it reconcile?

Year to date totals show everything paid and deducted since the payroll year began, so those figures accumulate while the current-period column resets each time. They matter because they are what your annual tax document is built from, the W-2 in the US and Form 16 in India.

Checking them is a genuinely useful habit, and the reason why is easier to show than to argue. The US Consumer Financial Protection Bureau publishes a teaching handout called "How to read a pay stub", which ranks near the top of search results for this exact question. Its sample stub is careful work: gross income $200.00, four tax lines totalling $24.67, net income $175.33, and the Social Security and Medicare figures land exactly on 6.2% and 1.45% of $200.

Its year to date column does not reconcile. The four YTD tax lines shown add up to $259.02, against total YTD deductions of $479.02 printed on the same stub.

That is on a US government financial-education handout that has been in circulation since 2022. The point is not that the CFPB made a mistake. It is that the YTD column is the part nobody checks, including the people who print it, and it is the column your annual tax form is assembled from. For how those totals land on the US annual form, box by box, see what a W-2 form is.

Is Form 16 being replaced by Form 130?

Eventually, and not for the certificate arriving this year. This is worth stating carefully because the claim has started circulating without its timing attached, and the timing is the part that affects everybody.

The Income-tax Act, 2025 received assent on 21 August 2025 and came into force on 1 April 2026. Rule 215 of the Income-tax Rules, 2026 prescribes Form 130 as the salary TDS certificate, replacing Form 16, due by 15 June following the tax year.

But tax deducted on salary for FY 2025-26 is still governed by the 1961 Act, which the Central Board of Direct Taxes has confirmed in its own transition guidance. So the certificate issued in June 2026, for the year most people are filing for now, is Form 16 exactly as before. Form 130 first exists in June 2027.

Anyone reading that Form 16 has "become" Form 130 and then looking for Form 130 this season will not find one.

What this post deliberately does not cover

This explains what appears on a pay stub and a salary slip and what the law requires of the document. It does not compute anyone's tax, and it makes no recommendation about salary structure, regime choice or investment declarations.

The full CTC to take-home breakdown, including how the provident fund ceiling changes the arithmetic, lives in gross versus net income. The effect of the Labour Code's fifty percent rule on monthly cash is in the Labour Code post. The US annual form and its boxes are in what a W-2 form is.

Individual US state pay stub laws are out of scope, because they differ on who must be given a statement, in what format, and whether an employee can insist on paper. Anyone checking their own position needs their own state's rule rather than a national summary.

Income tax computation is a question for a chartered accountant in India or a CPA in the United States, and a wage dispute or a missing payslip is a question for a labour lawyer. This post is not a substitute for either.

Frequently asked questions

Did the meal card and gift limits change in 2026? Both went up, and Rule 15 of the Income-tax Rules 2026 sets them. Free food and non-alcoholic beverages provided during working hours, at the office or through vouchers usable only at eating joints, stay outside your taxable pay to the extent the value does not exceed Rs 200 per meal, where the 1962 Rules allowed Rs 50. Gifts and vouchers are valued at the amount of the gift, but the perquisite is nil if the total for the tax year is below Rs 15,000, where the old threshold was Rs 5,000. One word in that rule is worth reading carefully. It says below Rs 15,000 in aggregate, not up to Rs 15,000, so a gift total landing exactly on Rs 15,000 is not covered by the nil valuation. Several summaries of the change print it the looser way. These are Tax Year 2026-27 figures, so they apply to salary paid from 1 April 2026 and not to the return being filed for FY 2025-26.

Is an employer legally required to give you a pay stub? In India, yes. Section 50(3) of the Code on Wages, 2019 states that every employer shall issue wage slips to the employees in such form and manner as may be prescribed, and the Code on Wages (Central) Rules notified on 8 May 2026 prescribe Form V, issued electronically or on paper, on or before the payment of wages. In the United States, no. The Department of Labor states that the Fair Labor Standards Act requires employers to keep accurate records of hours worked and wages paid but does not require an employer to provide employees pay stubs. Pay stub rules in the US come from individual state law, which is why the requirement changes when you change state.

Why does my salary slip not add up to my CTC? Because CTC counts what the employer spends and the slip records what the employer pays you. The employer's own provident fund contribution, gratuity accrued against future service and any insurance premium are all inside CTC, and none of them is an earning on your slip or a deduction from it. A common error, which appears in a worked example on at least one page ranking for this topic, is to show the employer's provident fund share as an employee deduction reducing net pay. It is not a deduction. It never passed through your gross salary in the first place.

What is EPF on a salary slip and how is it calculated? EPF is the employee's own provident fund contribution, set at 12% of wages by paragraph 18(2) of the Employees' Provident Funds Scheme, 2026. It is calculated on a statutory wage ceiling of Rs 15,000 a month, which the government re-notified on 29 May 2026 under the Code on Social Security, so the minimum contribution works out to Rs 1,800. An employer may voluntarily contribute on the full basic salary instead, and many do, which is why two people on the same salary can show different EPF figures. Proposals to raise the ceiling to Rs 21,000 or Rs 25,000 have been reported but no notification has been issued, so Rs 15,000 remains the law.

What is the YTD column on a pay stub? Year to date totals show everything paid and deducted since the start of the payroll year, so each line accumulates while the current column resets every period. The YTD figures are what reconcile against the annual tax document, the W-2 in the United States and Form 16 in India, which is the practical reason to read them. They are also worth checking arithmetically: the sample stub in the US Consumer Financial Protection Bureau's own teaching handout shows total year to date deductions of $479.02 while its four year to date tax lines add up to $259.02.

What is FICA on a US pay stub? FICA covers the two federal payroll taxes, Social Security and Medicare, and they behave differently from each other. Social Security, often labelled OASDI, is 6.2% of earnings up to a yearly ceiling that rose to $184,500 for 2026 from $176,100 in 2025, after which the deduction stops for the rest of the year. Medicare is 1.45% with no ceiling, so it continues on every dollar. An extra 0.9% Additional Medicare Tax applies above $200,000 for a single filer and $250,000 for a married couple filing jointly, and the employer does not match that part.

Is Form 16 being replaced by Form 130? Eventually, but not for the return most people are filing now. The Income-tax Act, 2025 came into force on 1 April 2026, and Rule 215 of the Income-tax Rules, 2026 prescribes Form 130 as the salary TDS certificate that replaces Form 16. The Central Board of Direct Taxes has confirmed that tax deducted on salary for FY 2025-26 is still governed by the 1961 Act, so the certificate issued in June 2026 is Form 16 as usual. Form 130 first appears in June 2027, covering the following tax year.

What is professional tax on an Indian salary slip? Professional tax is a state levy on employment, deducted by the employer and paid to the state government, and Article 276(2) of the Constitution caps it at Rs 2,500 per person per year. That ceiling has stood since the Constitution (Sixtieth Amendment) Act, 1988 raised it from Rs 250 with effect from 20 December 1988. Whether it applies at all depends on the state. Delhi, Haryana, Uttar Pradesh, Uttarakhand and Himachal Pradesh levy none, which their state accounts confirm by carrying no revenue at all under the professional tax head. Punjab does levy it, at Rs 200 a month or Rs 2,400 a year under its State Development Tax Act, 2018, despite several payroll pages listing Punjab among the states that do not.

Sources

• Income Tax Department of India, Rule 280, Allowances for purposes of Schedule III [Table: Sl. Nos. 12 and 13], Income-tax Rules 2026, read from the notified Rules for the ₹3,000 children's education and ₹9,000 hostel monthly limits per child, both capped at two children: incometaxindia.gov.in

• Income Tax Department of India, Rule 15, Valuation of perquisites, Income-tax Rules 2026, read from the department's own rule page for the Rs 200 per meal limit and the nil-below-Rs-15,000 gift threshold: incometaxindia.gov.in

• The Code on Wages, 2019 (Act 29 of 2019), section 50(3) on the wage-slip duty and section 69 repealing the Payment of Wages Act, 1936 indiacode.nic.in

• Ministry of Labour and Employment, Gazette notification S.O. 5322(E) of 21 November 2025 bringing the Code on Wages into force egazette.gov.in

• Press Information Bureau, Government makes the four Labour Codes effective, 21 November 2025 (rationalising 29 existing labour laws) pib.gov.in

• PRS Legislative Research, Code on Wages (Central) Rules, 2026 (G.S.R. 343(E) of 8 May 2026, prescribing the wage slip in Form V) prsindia.org

• Ministry of Labour and Employment, S.O. 2702(E) of 29 May 2026 re-notifying the Rs 15,000 provident fund wage ceiling under the Code on Social Security labour.gov.in

• Employees' Provident Funds Scheme, 2026 (G.S.R. 525(E) of 29 June 2026), paragraph 18(2) for the 12% contribution rate egazette.gov.in

• Employees' State Insurance Corporation, Contribution (0.75% employee and 3.25% employer with effect from 1 July 2019) esic.gov.in

• Constitution of India, Article 276(2) (professional tax capped at Rs 2,500 a year, raised from Rs 250 by the Constitution (Sixtieth Amendment) Act, 1988) legislative.gov.in

• Punjab State Development Tax, Frequently asked questions (Rs 200 a month, Rs 2,400 a year) psdt.punjab.gov.in

• Punjab State Development Tax Act, 2018 (Punjab Act 11 of 2018), section 4 and the Schedule psdt.punjab.gov.in

• Comptroller and Auditor General of India, state Finance Accounts for Delhi, Haryana, Uttar Pradesh, Uttarakhand, Himachal Pradesh and Punjab (revenue head 0028, taxes on professions, trades, callings and employment) cag.gov.in

• The Income-tax Act, 2025 (Act 30 of 2025, in force from 1 April 2026) egazette.gov.in

• Income-tax Rules, 2026 (G.S.R. 198(E) of 20 March 2026), Rule 215 prescribing Form 130 incometaxindia.gov.in

• US Social Security Administration, 2026 Social Security changes (taxable maximum rising to $184,500 from $176,100, announced 24 October 2025) ssa.gov

• US Department of Labor, elaws FLSA Advisor: are pay stubs required (the FLSA does not require an employer to provide employees pay stubs) webapps.dol.gov

• US Department of Labor, Fact Sheet 21: recordkeeping under the FLSA (the fourteen required records, three-year and two-year retention) dol.gov

• US Consumer Financial Protection Bureau, How to read a pay stub student handout (the sample stub discussed above) files.consumerfinance.gov