5 things your salary slip isn’t telling you about taxes

Every month, your salary slip quietly lands in your inbox—filled with acronyms, numbers, and deductions that often go unnoticed. While it shows your earnings, allowances, and statutory deductions, there’s much more hidden beneath those neatly tabulated figures. Understanding what your salary slip doesn’t directly tell you can help you make smarter tax decisions and plan your finances better

Here are five important things your salary slip isn’t telling you about taxes:

Not all allowances are tax-free

Your salary slip may display components such as HRA, LTA, special allowance, or conveyance allowance, but it doesn’t indicate how much of each is truly exempt from tax. "For instance, House Rent Allowance (HRA) qualifies for exemption under Section 10(13A) only if you actually pay rent and meet the prescribed conditions. Likewise, Leave Travel Allowance (LTA) is exempt only for genuine travel within India and is limited to two journeys per block of 4 years. In the absence of proper documentation, these allowances—though itemised on your payslip—can become fully taxable," says Gaurav Jain, Partner, Direct Tax, Forvis Mazars India.

Your 'Take-Home Pay' may not be the same as your taxable income

Many employees assume their “take-home pay” is the same as their taxable income, but that’s not the case. Your take-home pay only reflects the net salary after deductions. At the same time, your taxable income includes several elements not clearly reflected in your salary slip—such as the employer’s contribution to provident fund exceeding ₹7.5 lakh per year, perquisites like rent-free accommodation or company-provided car, free meals and bonuses accrued but not yet received. These additional components often lead to differences between the figures shown on your payslip and those appearing in your Form 16 or Income Tax Return (ITR). Your taxable income may be higher even though your take-home pay is lower.

Tax deductions under section 80C and beyond don’t reflect on your slip

Your salary slip usually reflects compulsory deductions such as EPF, TDS, or professional tax. However, it doesn’t indicate the tax-saving investments or deductions you get. 

Investments in PPF, ELSS, or life insurance, payments like tuition fees, and deductions for health insurance (Section 80D of the Income Tax Act), home loan interest (Section 24), or donations (Section 80G) all help reduce your taxable income. However, it may not appear on your payslip if the relevant information is not provided to the employer promptly by the employee.

TDS is not the final tax

The TDS deducted from your salary is just a provisional tax, not the final liability. "Your actual tax payable or refund is determined after considering all income sources, deductions, and exemptions while filing your Income Tax Return. It may differ—being either higher or lower—and may also result in the refunds," said Jain.

Changing regimes can change your tax picture

Your salary slip doesn’t indicate whether you’re being taxed under the old regime—which allows exemptions and deductions—or the new regime, which offers lower tax rates but minimal exemptions. This choice, made at the beginning of the financial year, can have a major impact on both your take-home salary and overall tax liability. "Many employees skip comparing the two options and end up paying more tax than necessary. It’s important to evaluate both regimes carefully before submitting your investment declaration to HR or filing your income tax return," adds Jain.