Salary certificate refers to an official document issued by the employer that authenticates the employee’s income and employment status. This document basically serves as proof of income for an individual employee and often provided by the request of the employee. However, a salary certificate could be essential for many financial and legal applications like visa processing, loans, tax returns and many more. Common mistakes often occur when creating a salary certificate format. That’s why it is essential to learn about the key elements required for an accurate and professional certificate. HR software can simplify this process by easy generation of salary certificates with customized, error-free and professional formats.
In this article, we broadly emphasized on the format of salary certificates in Bangladesh. All the important information regarding the articulation of this document are listed below. We have even introduced three different formats of the certificate for your ease.
What Is a Salary Certificate?
A salary certificate is an official document that verifies the employee’s income along with employee details. It works more as an income-proof that allows the individual to use it whenever he needs. It is often required in cases like applying for new jobs, loans, financial help, and renting a house. Besides, this income statement comes in handy while filing tax returns or being eligible for housing and vehicle allowance.
Usually, the salary certificate contains the employee’s information, such as name, designation, joining date, and basic salary. For simplicity, it also shows the breakdown of the total salary and net payments with proper deductions. Employees can easily access this certificate upon request from the employers with proper application.
The general practice is to provide two copies of the salary certificate. One is offered to the employee, and the other is preserved by the employer as official evidence. This helps when any disputes arise regarding salary, benefits, and allowances.
What Are the Key Elements of a Salary Certificate in Bangladesh?
The key elements of the salary certificate for employees are employee and employer information, salary details & components, including pay details, and the authority’s signature. Knowing these components is necessary before creating a cash salary certificate format.
Employee Information
The main details of the employee that should be present are the employee’s name, ID, and designation. This helps specify the employee and makes it easy to track. As a result, serious issues like applying for a loan would help the organization understand the individual.
Employer Information
Along with the employee information, the employer information is also needed. It is usually provided to prove the company’s authenticity and reference.
For completeness, the company name and address are given. You can also add any additional information you want. Keep it direct and simple so that government firms and banks can understand your company’s details and reputation.
Salary Details
The salary details section comes right after the employer and employee details. It usually contains the overview and the breakdown of the salary.
The gross salary, total deductibles and the net salary is outlined in this part. This section is prepared such that everyone gets an inside out of the salary details.
Gross Salary
The gross salary is included in the salary details. It is the most important part of the salary details. This information states the employee’s annual salary without any deductions. It is the actual amount without any benefits and deductions. This helps the employee to easily apply for a loan or visa.
The gross salary solely does not provide enough data. The breakdown of the gross wage into sub-categories is essential in a salary certificate for a bank loan or tax return.
- Basic Salary: It is the fixed amount of the salary and the main remuneration. It comprises 50% to 60% of the gross salary.
- House Rent Allowance (HRA): This amount is provided for the house rent expense. Generally, it is allocated as 50% of the basic salary.
- Medical Allowance: Medical allowance is kept aside for medical emergencies. Ranging from work-related injury, disability, and death compensation, it has many facilities.
- Others: Companies may provide other allowances apart from these two. Transporting, utility allowance, and even bonuses can be included.
Deductions
From the gross salary, the deductions are applied. This section gives an overview of the deductions that the employee pays with the salary.
- Tax Deductions: Taxes are the most usual and legal deductions from the salary. This amount is regulated and fixed by the government regulations.
- Provident Fund: This fund is subtracted from the employee’s salary and is added to the retirement fund. Depending on the company policies, this contribution can vary.
- Other Deductions: Other deductions include loans, health insurance, and leaves. They are also adjusted from the gross salary.
Net Salary
As the name suggests, the net salary is the final salary. After all the deductions and benefits, the final amount is called the net salary.
To calculate the net salary, you must subtract the total deduction from the gross salary. This will give you the employees’ net salaries. This is often explicitly mentioned in the certificate to save from the hassle of calculation
Pay Period
The pay period is the time that mentions if this salary is generated monthly, quarterly, or per day. Without this time frame, the salary details would not hold any significance. This would also make the salary certificate for tax returns inappropriate, making the decision-making process trickier.
Employment Status
Employment status refers to the working nature of the employee. The employment status can be full-time, part-time, and even contractually. This information is also showcased with the salary information.
This is crucial as this data is analyzed when applying for loans, housing allowances, and even new jobs. The person who has proof of working full-time has a greater chance of being accepted for a loan. On the other hand, when someone works in a contract, the banks might not find him capable of granting the loan.
Date of Employment
Some companies prefer to mention the date of joining. This helps to understand the timeline of the employee’s working experience. Seeing this, decisions can be made easily by understanding the reliability of the employee’s history.
Authority Signature and Seal
All this data is useless without the authority’s signature. It gives credible ground and leaves no room for fraudulent activities.
As a salary certificate is only provided upon request, it is usually signed by the department head or the employer itself. Along with this, the company seal or stamp is also given to authenticate the certificate furthermore.
Date of Issuance
The date of issuance provides the exact date when the salary certificate is issued. Along with other details, this simple date is also important as it tells if the information is updated or not.
Examples of Salary Certificate Format in Bangladesh
Here are some effective salary certificate formats commonly used in Bangladesh. These templates serve as a solid foundation. Feel free to customize yours to suit your business’s specific needs and style. The following formats are designed to help you create professional documents quickly and efficiently.
Salary Certificate Format Example #1 (Microsoft Word & Google Doc Supported)
Salary Certificate Format Example #2 (Microsoft Word & Google Doc Supported)
Salary Certificate Format Example #3 (Microsoft Word & Google Doc Supported)
What Are the Common Uses of Salary Certificates?
Without a proper salary certificate, you can’t complete financial or legal work as an employee. From a mere bank account opening to a visa application, salary certificates provide complete employment verification.
Bank Account Opening (Salary Account)
Asking for a salary certificate for bank account opening is a must for banks these days. Most banks won’t consider opening your account without proof of income. Thus, you need to provide the certificate if you’re an employee. For employers, the procedure may vary.
Loan Applications
To apply for a loan, you need to provide a salary certificate. Asking for a salary certificate for a bank loan is nothing new. They take this proof of income to make sure if you’re actually eligible or not. They also analyze employment timeframe, status, and salary amount. All these factors work together and play an important role for banks in deciding your loan amount and eligibility.
Visa Applications
This is not just for banks; salary details are needed for other purposes, too. One of them is for immigration purposes. A salary certificate for a visa application is crucial while traveling to other countries.
Along with other important documents, like national identity & passport, it is equally essential. It works as proof for the visa officers to know that you can support yourself aboard.
Income Tax Return
Every citizen needs to file a income tax return. And, to do that, you will again need the income certificate. To fill out the form and complete the full process, the salary certificate for tax return has no alternative.
Along with these, you also need to provide other information like your national ID card, address, and other relevant bank statements. Providing all these means staying compliant with the laws and tax obligations.
Employment Verification
Without the salary certificate and salary statements, there is no stronger proof of employment. While renting a house or applying for a new job, you might stumble upon employment verification many times. The salary certificate helps a lot in such cases.
For this, it’s best to request your employer for the salary certificate. You can use this certificate for any employment verification, boosting credibility.
What Are Common Mistakes to Avoid When Issuing a Salary Certificate?
While issuing a salary certificate, you need to keep your eyes open. A simple mistake in the format will not only waste your time but also make the process difficult for your employees. Some of the common mistakes that you need to avoid are as follows.
- Inaccurate personal information about the employee.
- Not providing the complete information of the company.
- Less data and vague salary details.
- Not mentioning the deductibles and gross salary.
- Miscalculated salary amount.
- No authorized signature or seal to prove the authenticity.
- Outdated information about the salary or the employee.
How Can HR Software Streamline the Process of Generating Salary Certificates?
From automatic generation of employee information, integrating data to make effective & efficient real-time updates and secure distribution, HR software is all-in-one. The key point is straightforward here. While you can create certificates manually, the risk of errors is considerably higher. To minimize this risk, opting for HR software is always the best choice. Be sure to choose the best HR software in Bangladesh that aligns with your specific needs. This tool offers the added benefit of seamless integration with finance and audit departments.
What is the Difference Between a Salary Certificate and a Salary Slip?
A salary certificate is an official document, works as proof of employment needed for loan applications or mortgages. On the other hand, a salary slip is a detailed breakdown of the employee’s monthly salary with the taxes, deductions and other allowances. It is more like a paycheck showcasing the net salary.
| Feature | Salary Certificate | Salary Slip |
|---|---|---|
| Purpose | Provides the income statement of the net salary or gross amount as proof of employment | Provides detailed breakdown of the salary for better understanding and transparency |
| Level of details | Just states the total amount of the salary | The complete details of the salary components |
| When it is issued | Upon request | Monthly |
| Issuer | Employer himself | Payroll department |
Final Thoughts
Creating a proper salary certificate format by acknowledging the key elements is essential to ensure accuracy and compliance in payroll processes. A well-crafted salary certificate not only helps to visualize the salary structure but also supports the legal and financial applications.
To enhance efficiency in salary certificate generation, using professional HR software is a good investment. These tools can automate processes, ensure adherence to regulatory standards and overall simplify the whole process. Thus, your HR team can focus on other strategic initiatives.
