You have salary item type options available in salary item of the salary component. Here you can define if the item is going to be a salary, or a deduction, or a reimbursement of expenses done by the employee. You can choose any one type of salary items from the following:
- Earnings: Salary payable to the employee and forms part of CTC. For e.g., Basic Salary, DA etc.
- Deductions: These are the items deductible from employee’s salary. These deductions don’t cover TDS, Provident Fund, Professional Tax or ESI.
- Statutory: Select this to add statutory deductions, such as PF, TDS, Provident Fund, Professional Tax or ESI etc.
- OverTime: Select this to mark item as overtime. This is a taxable item.
- Reimbursement: This is neither an earning nor a deduction. This covers the expenses or costs spent by the employee on behalf of the organization while performing work. This is not “Taxable”, therefore, tick tax and CTC related boxes carefully.
