0 hidden charges. 0 forex

Accounting: Under Which Head Does A Salary Account Belong?

Reviewed by
Created on
April 4, 2023


What’s Inside

A salary is simply the contractually agreed upon compensation an employee receives for their work rendered over a fixed period. An employee’s salary is typically presented as an annual sum divided into equal instalments throughout the year.

Employees receive their paychecks from the company each month in a salary account. Corporations usually use certain banks to create accounts for all of the staff. The account holders are entitled to receive interest on the account balance. Usually, interest is computed daily and transferred into the account once a quarter. Before we see which salary comes under which head in the accounting tally, it’s essential to look at salary accounts in some detail.

A Deeper Look into Salary Accounts

  • While anyone can open a regular savings account, only salaried individuals can start a salary account.
  • The purpose of a savings account is to encourage savings, while the main purpose of a salary account is to credit employee salaries.
  • An individual can hold a savings account or jointly. But, only an individual can hold a salary account.
  • Most savings accounts have a minimum balance requirement, but most salary accounts don’t need you to keep a minimum balance.

Benefits: Salary account vs Savings account

  • We have already mentioned the zero minimum balance requirement. This can save you from paying penalties for a low balance and makes for a much more flexible account.
  • The availability of debit cards and chequebook services is another perk for owners of salary accounts. The bank issues the users with ATM cards so they may withdraw money both online and offline.
  • Additionally, they can access personal chequebooks that they may use to make payments. Members with a salary account get access to mobile and online banking. Account holders can conduct their business from the convenience of their homes.
  • Lastly, obtaining a loan for salary account holders is simpler since consistent paycheck credit gives security.

How are salary accounts seen in accounting terms?

A commercial organisation has to engage in several transactions. The challenge now is how such transactions can be identified in specific terms. The account heads are made to distinguish between the numerous transactions. Account heads are the names given to specific categories of transactions.

Account heads resemble names of people, places, or things like books. For instance, if several people incur transportation costs numerous times, all transactions will be recorded under Conveyance Expenses a/c. Similar to how all cash-related transactions will go under the Cash a/c, etc. All transactions in an organisation have a specific name

Salary = Indirect Expenses

So your salary account comes under which head? In accounting terms, salaries are seen as indirect expenses. Indirect expenditures fall under the heading of expenses. Indirect expenses are costs of running a firm that cannot be directly linked to creating goods or services. In the income statement, which displays a company's revenue and costs for a certain period, such as a quarter or month, indirect expenses are often included.


Many institutions offer their own set of rewards and benefits for salary account users. A zero minimum balance limitation, an easier time getting approved for loans, a debit card, and online banking services are just some benefits you get from your salary account.

Fi, and its licensed banking partner Federal Bank, provides a salary account with many benefits. For starters, you get 10% of your salary as Fi-Coins — every month and 5,000 redeemable Fi-Coins as a joining bonus.

Other perks include a free VISA Platinum debit card with zero forex charges, priority customer service & more. And lastly, Fi will also help you manage/grow your money with features like Connected Accounts, Analyser, Goal-based saving, SIPs & automatic payments.

Frequently Asked Questions

1. Where do salaries belong in accounting?

Salary is an expense that the firm incurs during the accounting period and hence belongs on the debit side of the P/L account.

2. Is the salary account an expense?

Yes, the salary account is an indirect expense.


Fi Money is not a bank; it offers banking services through licensed partners and investment services through epiFi Wealth Pvt. Ltd. and its partners. This post is for information only and is not professional financial advice.
Share this article
Copied Link!
Work & Money
Accounting: Under Which Head Does A Salary Account Belong?


View similar articles in
Work & Money
Get the Fi app