What is a certificate of earning?
A certificate of earning is a certificate issued to every employee showing total income for the year, tax payments and deductions for a financial year. It is usually issued at the end of the financial year or when an employee discontinues work with an organization.
Who needs to have a certificate of earning?
Employees should have a certificate of earning to file tax returns for the year. The certificate provides important information about the deductions and the tax that has been paid by the employee. Moreover, an employee looking for a new job should also find a certificate of earning useful while negotiating salary for a new organization. The certificate of earning is issued by an organization’s human resource department.
What is a salary verification letter?
A salary verification letter, on the other hand, is a letter that states the current salary of an employee and verifies that the employee works at your organization.
The letter is issued in the name of a particular organization. It is more of a communication letter from one organization to another verifying about an employee.
A salary verification letter is often quite useful, particularly when applying for a credit card or loan. The letter serves as proof of income.
The salary verification letter includes the name of the employee, gross and net salary, details of deductions, date of joining and the name of the organization for which the letter is intended.
A salary certificate is issued by an organization to the employee verifying that the employee works at the organization and has a stable regular income. The salary certificate states the employee’s name, designation, gross salary, deductions, net salary and the date of joining. It is only issued upon request placed by an employee. The employee usually needs to mention a reason for why they want to be issued a salary certificate. The salary certificate is valid for a year or less.
Difference between a certificate of earning, salary verification letter, and salary certificate?
While the information on all three of these letters is essentially the same, there are some differences in the purpose for which each of these certificates are used.
A certificate of earning provides the record for the entire fiscal year ended including the employee’s name, organization name, fiscal year, earnings, taxes, and deductions.
A salary verification certificate, on the other hand, mentions the current salary and deductions only and is issued by an organization for use to a particular organization. The salary verification letter cannot be used for any other purpose. For example, if a person is applying for two different loans, then he/she will have to ask for two separate salary verification letters as each will be addressed to a specific lending institution.
A salary certificate also mentions the status and salary of an employee. However, the certificate has a more general use than a salary verification letter. The salary certificate is issued at the request of the employee and can be used for more than one purpose. An employee may submit the same salary certificate to two different organizations.
We have designed templates for a certificate of earnings, which are available to download for free here.