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Salary
Meaning of Salary
The meaning of the term ‘salary’ for purposes of income-tax is much wider than what is normally understood. The term ‘salary’ for the purposes of Income-tax Act, 1961 will include both monetary payments (e.g. basic salary, bonus, commission, allowances etc.) as well as non-monetary facilities (e.g. housing accommodation, medical facility, interest free loans etc.).
Salary’ under section 17(1), includes
Salary’ under section 17(1), includes
- wages,
- any annuity or pension,
- any gratuity,
- any fees, commission, perquisites or profits in lieu of or in addition to any salary or wages,
- any advance of salary,
- any payment received in respect of any period of leave not availed by him i.e. leave salary or leave encashment,
- Provident Fund:
- the portion of the annual accretion in any previous year to the balance at the credit of an employee participating in a recognized provident fund to the extent it is taxable and
- transferred balance in recognized provident fund to the extent it is taxable,
- The contribution made by the Central Government or any other employer in the previous year to the account of an employee under a pension scheme referred to in section 80CCD.
Basis of Charge
Section 15 deals with the basis of charge. Salary is chargeable to tax either on ‘due’ basis or on ‘receipt’ basis, whichever is earlier.
Advance Salary
Advance salary is taxable when it is received by the employee irrespective of the fact whether it is due or not. it cannot be subsequently brought to tax in the year in which it becomes due.
Arrears of salary
If the salary paid in arrears has already been assessed on due basis, the same cannot be taxed again when it is paid.
Disclaimer: Although all provisions, notifications and updates, are analyzed in-depth by our team before writing to the public. Any change in detail or information other than fact must be considered a human error. The Guide, Articles, Blogs, FAQ and videos is to provide updated information. Tax matters are always subject to frequent changes hence advisory is only for the benefit of the general public. Hence neither TaxSmooth nor any of its Team members is liable for any consequence that arises on the basis of these write-ups.
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