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Decoding Salary Accounts: What Are They?

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April 28, 2023


What’s Inside

It is a thrilling moment when you get a job, and your employer opens a salary account for you. While there is a personal sense of achievement that you feel, some questions also come to mind. “Which type of account is a salary account?”, “Do we earn interest on a salary account?”, “How is it different from a regular savings account?”

This article will decode salary accounts and tell you everything you need to know about them.

What is a Salary Account?

A salary account is a type of bank account specifically designed for employees to receive their salaries from their employers. It is typically a zero-balance account, meaning you do not have to maintain a minimum balance in the account.

Salary accounts usually offer a range of benefits, such as no or low maintenance fees, free debit cards, free ATM withdrawals, and online banking services. However, they may have certain restrictions, such as a limit on the number of transactions or a cap on the amount that can be deposited in the account.

From a purely accounting perspective, salary is income for the recipient (employee), while it is an expense for the payer (employer) and forms a part of their P&L statement. 

What are the Benefits Offered By a Salary Account?

 A salary account comes with a host of benefits, some of the prominent ones being:

Zero Balance Requirement

Apart from seamlessly depositing your salary in your account, one of the primary benefits you get is that a salary account has no minimum balance requirement. Thus, you avoid paying penalties incurred due low balance on a regular account.

Online Banking Services

Today’s on-the-go generation has no time to stand in long bank queues. A zero-balance salary account, as the one Fi Money offers, gives you an entirely digital banking experience. Access your account through a web portal or a mobile app, transfer money, pay bills, and enjoy other services without lags or delays.

Multichannel Withdrawal Facility

Apart from the ability to send and receive money online, you also get a physical ATM card to withdraw cash from partner bank ATMs or make it online/offline when the need arises. Furthermore, a personalised chequebook is also provided for making cheque-based payments.

Other Financial Services

You can put your money to work by availing of one of many investment services that your salary account can offer. Direct investment in mutual funds or government bonds or linking your salary account with a demat account for trading in shares – are just some avenues through which you can build long-term wealth. 

If all this wasn’t enough, a salary account also gives you easier access to debt instruments such as a personal loan or vehicle loan. If you have a salary account in the same bank you’re seeking a loan from, all your personal and financial details are already available with the institution. This makes the application process smoother and quicker, but you can also expect attractive interest rates and repayment terms, provided you meet the eligibility criteria.

In Conclusion

The salary you receive is income for you while being an expense for the employer. Using a salary account can benefit you in more ways than one and help you receive your monthly dues promptly. It is equally beneficial to your employer as well. 

Through its partner Federal Bank, Fi provides a salary account with many benefits. For starters, you earn yearly benefits worth ₹30,000.

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

What type of account is a salary account in financial or accounting terms?

At its core, a salary account is a type of savings account for you, the employee, who is receiving the salary. However, when you talk about accounting terms, salaries paid are a type of indirect expense (part of the operational cost) for the employer. 

How do salary accounts typically fit into a business or organisation's chart of accounts or accounting structure?

Salary accounts do not directly fit into a business or organisation's chart of accounts or accounting structure. However, from an employer's perspective, the salary paid to employees is recorded as an expense in its income statement. Since the salary is mostly transferred from the company's bank account to the employee’s salary account, it is recorded as a debit to the salary expense account in the income statement and as a credit to the bank account in the balance sheet. 

Are there any specific accounting principles or conventions governing salary account classification?

No, there are no specific accounting principles or conventions that govern the classification of salary accounts. The account holder can withdraw the funds deposited at any time without prior notice. However, the classification of the funds deposited and withdrawn from these accounts generally follows the principles of double-entry accounting.

The funds deposited in a salary account are treated as income for the account holder, while the salary paid to the employee is recorded as an expense by the employer.


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.
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