Once you approach a bank or similar kind of financial institution for car, house and personal loans, Salary Certificate submission is mandatory, along with other documents. To put simply, it’s a certificate issued by your employer to verify your income and stability of position. Banks would ask to furnish the certificate to evaluate your ability to pay off the loan. If you are planning to process a bank loan or keen to expand information in general, here we are going to offer an overview on your salary certificate.
What does a salary certificate mean?
First thing first. Salary certificate is a letter of verification from an employer that confirms the carrier of the letter has a regular and dependable income. The employee has to make a request to the management on the purpose of the certificate and the same is mentioned in the letter as well. The certificate is valid for one year or less, and can be submitted to financial institutions as part of loan application procedure.
What does a salary certificate contain?
Salary certificate is an official document that mentions details of the employee’s monthly total salary, monthly total deductions, break-ups and summary of net salary received during the month in question. It also contains identity details, official position and remaining years to retirement of the employee. The certificate should be able to express financial position of the employee for the bank to grant loans.
How does a salary certificate look like?
The format of salary certificate may vary from company to company, because there is no one universally accepted format. However, the certificate must have details of Gross Salary amount, deductions from Income and other Taxes, EMIs of existing loans (if any), provident fund contributions etc. It must show the sum of all deductions. In the end, the certificate must have the Net Salary amount received by the employee, that is the Gross Salary minus Total Deductions. Here’s a sample salary certificate for reference.