Salary Certificate | Uses and Format of Salary Certificate
Salary Certificate: A salary certificate is a formal document issued by an employer to its employee, declaring employment. The document is issued on the organisation's letterhead, along with the organisation's official seal. Furthermore, the certificate is often verified by an authority from the employee's place of employment. Essentially, the salary certification signifies that the individual in question is currently employed with an organisation. Hence, the salary certificate can be deemed as an important piece of document used in many scenarios.
Salary certificates are often required by many financial institutions – for the purpose of disbursing loans. For financial institutions, a salary certificate contains many elements that provide indications about an individual's creditworthiness – which can be a factor for approval or rejection of credit card applications. Salary certificates are also required when filing taxes.
The following are some of the elements typically provided on a salary certificate. Please note – the elements may change/ or the terminologies may vary from organisation to organisation.
Elements of Salary Certificate
- Employee name
- Employee code (if any)
- Employee's designation
- Cost to Employer/ cost to the company
- Employee's basic salary
- Employee's gross salary
- Dearness allowance
- House Rent Allowance (HRA)
- Medical allowance
- Travel allowance
- Total allowances
- Date of joining
- Deductions (including Provident Fund)
Other details may also be included in a salary certificate – such as festival allowance, one-time bonuses, etc.
Format of a Salary Certificate from Employer
Following is the format of a typical salary certificate:
|Salary Certificate |
Name of Employee _______
Signature of the Employee ________
This is to certify that (employee name), residing at (employee address) whose signature appears above is an (employee type – contract/ permanent) employee of (organisation name) and their drawn pay and allowances for the (month/ year) are as follows:
Net Salary = (1)-(2) = ________________
Date of Joining:
(Seal and signature of authorized authority)
What are the Uses of Salary Certificate?
As stated before, salary certificate are used for many purposes, such as:
- For bank loans
- For credit/ debit card applications
- For payment of taxes
Format of Salary Certificate for Bank Loan Application
When a salaried individual approaches a bank for a loan, they are required to furnish basic documents, and a salary certificate is usually one of these documents. Depending on the information present in the salary certificate, banks can change the tenure or loan amount. The salary certificate format used in such cases will be as follows:
- Certificate showing gross pay + allowances
- All deductions such as EPFs, loan installments and advances repayable by the employee.
- Net salary (Gross pay – deductions)
FAQ's on Salary Certificate
What is the salary certificate?
A salary certificate is a document issued by an employer to its employee, declaring the compensation as well as deductions for the employee's work. The document is issued on the organisation's letterhead, along with the organisation's official seal.
What is the difference between salary slip and salary certificate?
A salary slip is a document that discloses how much salary an employee earns for a particular month. A salary certification is a document issued by an employer certifying the salary of an individual for availing loans and credit card applications.
How do I write a letter asking for a salary certificate?
Address the letter to your company HR or reporting manager, and state the actual reason for asking so. Furthermore, ensure to attach certain documents or information as requested by your employer.
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