What is Salary Certificate?

Salary certificate is an official document issued by the employer upon the request of the employee. It includes full salary details, designation, duties as well as employment period of the employee. It basically indicates the financial position of the employee in an organization. It is normally used for obtaining financial services from a particular bank or institution such as car loan, home loan etc. Its validity may remain for one year or less. It gives employee a breakdown of his or her salary and the overall amount that the employee is receiving including deductions and other income.

When to use a salary certificate?

The salary certificate is issued by the employer on the request of employee at the time when a person wants to apply for any loan or for any rental purpose. This certificate ensures that the person will be able to pay back the loan amount in the given time.

Many businesses ask the person to show his or her salary certificate before starting any business deal with him. This is done by businesses to secure them. The format of salary certificate should be simple and easy to understand. Salary certificate contains all the salary details of the employee and confirms that he or she is earning specific amount of money every month and also capable enough to pay back the money in case of termination of the agreement.


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Purpose of salary certificate

There are many purposes of salary certificate and they are as follows –

  1. It proves that employee has a regular income
  2. It guarantees that employee is an independent person
  3. It proves that the individual submitting the certificate is a trustworthy person.
  4. It guarantees that the person will be able to pay back the amount within the given time.
  5. It provides full salary information to the employee such as salary position, duties and employment period.

What constitutes a salary certificate?

The following elements constitute a salary certificate –

All the details of the employee including name, address, company name, designation along with the contact information.

Gross salary of the employee including basic salary and other allowances

Deduction details

Total deductions

Joining date of the employee

Present designation of the employee

Retirement date of the employee

Reason for issuing the salary certificate

Signature and designation of the officer on the certificate who has given the authority to issue the same.

Note – “Make sure all details are based on true facts & figures”

Usage of Salary certificate

Salary certificate serves as a proof of income. It is a formal document which shows the net & gross income of an employee. Salary certificate is required by an employee from the employer because of some reason. A reason can be any of the following –

Opening and managing of bank account – Banks require salary certificate from the applicant before opening a new bank account which is managed by the applicant later.

Applying for a loan or lease – As you have seen now days, landlords are prone to fraudulent acts when they are cheated by the expectations and agreement set by their tenants. In order to deal with this situation, landlords require salary certificates from their tenants as a security before approving their lease application.

It can also be requested by employee for record keeping purposes.

This certificate is also needed in specific financial transactions.

Salary certificate format

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