What is a Salary Certificate & Why is it important
AUTHOR :Muhammed Mustafa C T
https://taxgtower.blog/brqblog/my_post_view/What-is-a-Salary-Certificate-Why-is-it-important-1-618-423What is a Salary Certificate & Why is it important
As the name itself says, ‘Salary Certificate’ is a certificate that contains details regarding employee’s salary. It is issued by an employer on specific request by the employee. Salary Certificate is vitally important at the time of loan application; tax filing; visa processing; etc.
In the present article, let us briefly understand the term ‘Salary Certificate’, also figure-out its importance. Article also covers format of Salary Certificate for ready reference.
What is a Salary Certificate?
Salary Certificate is an official document which certifies employee’s salary as well as employment details. It is issued by the employer. Generally, it contains detailed break-up of monthly and annual salary of the employee. It is important to note that Salary Certificate is different from Salary Slip.
Importance of Salary Certificate
Salary Certificate serves as a proof of income of the employee. The importance of the same are highlighted hereunder -
- Loan application -
For processing loan application, banks/ financial institution sometimes demand submission of salary certificate.
- Credit card application -
While processing credit card application too, banks sometimes demand submission of salary certificate as it certifies income of the employee.
- Visa application -
Salary certificate is vital in case of applying for visa for foreign employment opportunity.
- Tax filing -
In some cases, employee need salary certificate at the time of filing of income tax returns.
Contents of Salary Certificate
Basic contents of Salary Certificate are listed hereunder -
- Employer’s information - Name, address and contact information,
- Employee’s information - Name, designation and other details (if any),
- Employee’s salary details - Basic pay; dearness allowance; other allowance; deduction; etc.
- Declaration, and
- Employer’s signature.
Format of Salary Certificate
Format of Salary Certificate is covered hereunder for ready reference -
[Employer’s name and address] Date : ___________ To Whomsoever it May Concern This is to certify that _______ (Employee’s name) _____ is working with our company as a ___(position/ role of the employee) __________ since ____(date of joining)______. The monthly as well as annual breakup of the salary is summarized hereunder - | ||
| Particulars | Monthly Amount | Annual Amount |
| Basic Pay | XXXXX | XXXXXX |
| Dearness Allowance | XXXXX | XXXXXX |
| House Rent Allowance | XXXXX | XXXXXX |
| Transport Allowance | XXXXX | XXXXXX |
| Others | XXXXX | XXXXXX |
| Total Cost to Company [CTC] | XXXXX | XXXXXX |
| Provident Fund | XXXXX | XXXXXX |
| Professional Tax | XXXXX | XXXXXX |
| Income Tax (i.e. TDS) | XXXXX | XXXXXX |
| Net Salary | XXXXX | XXXXXX |
This certificate is issued on specific request of the employee and the information provided, hereinabove, is true to the best of our knowledge. Sincerely, [Employer’s name and signature]___________ | ||
Frequently Asked Questions related to Salary Certificate
Some of the relevant Frequently Asked Questions (FAQs) with regard to Salary Certificate are answered hereunder -
1. How is a Salary Certificate different from Salary Slip?
Salary Certificate is generally issued for the entire period of employment of the employee. Whereas, Salary Slip is issued on monthly basis.
Further, Salary Slip covers more detailed break-up of salary as compared to Salary Certificate.
2. What is the difference between an Income Certificate and a Salary Certificate?
Income Certificate is a financial document which is issued by Government. However, Salary Certificate is a document which is issued by an employer.
Income Certificate reflects individual’s/ family’s annual income covering all the different sources of income. Whereas, Salary Certificate reflects only monthly and annual salary of the employee.
Income Certificate is required for availing special privileges from different educational institutions; to receive different types of pension; to get credit from banks; etc. But, Salary Certificate is required for loan/ credit card application; visa application; tax filing; etc.
3. Who issues Salary Certificate in a Company?
In the case of a Company, Salary Certificate is usually issued by the HR department or manager of the company.
4. Is Salary Certificate mandatory in India?
No, issuance of Salary Certificate is not mandatory. It is usually issued on the specific request of the employee.
5. What is the validity of a Salary Certificate?
Generally, there is no validity of a Salary Certificate as it certifies monthly and annual salary of the employee and also certifies the employment status.
6. What if I provide fake Salary Slip?
No, one should not provide fake Salary Slip. Issuance of fake Salary Slip may result into job loss; loan rejection; legal action; punishment; etc.
Disclaimer:
(Note: Information compiled above is based on my understanding and review. Any suggestions to improve above information are welcome with folded hands, with appreciation in advance. All readers are requested to form their considered views based on their own study before deciding conclusively in the matter. Team BRQ ASSOCIATES & Author disclaim all liability in respect to actions taken or not taken based on any or all the contents of this article to the fullest extent permitted by law. Do not act or refrain from acting upon this information without seeking professional legal counsel.)
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