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Income Under The Head of Salary

This document discusses income from salary under section 14 of the Income Tax Act of 1961. It defines salary as any payment or remuneration received for services rendered. Salary is taxed on a due basis, received basis, or for arrears of salary. Sections 17 outlines what is included in salary such as wages, annuities, fees, commissions, perquisites, advances, leave encashments, provident fund balances, and annual government contributions. Deductions from salary are also discussed under section 16 including entertainment and professional tax allowances. The document also covers the different types of provident funds an employer can set up for employees.

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586 views2 pages

Income Under The Head of Salary

This document discusses income from salary under section 14 of the Income Tax Act of 1961. It defines salary as any payment or remuneration received for services rendered. Salary is taxed on a due basis, received basis, or for arrears of salary. Sections 17 outlines what is included in salary such as wages, annuities, fees, commissions, perquisites, advances, leave encashments, provident fund balances, and annual government contributions. Deductions from salary are also discussed under section 16 including entertainment and professional tax allowances. The document also covers the different types of provident funds an employer can set up for employees.

Uploaded by

kajal
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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INCOME UNDER THE HEAD OF SALARY

Heads of Income under Section 14 of Income Tax Act, 1961:-


Income
__________________________________________________________________________________

Salary Income from Capital Profits & Gains Income from


House Property Gains Business/Profession other sources
Salary
Salary means any payment /remuneration/income received by a person from another person for services
rendered by him in favour of other person.
Basis of Charge (Section:-15)
__________________________________________________________________________________

Due Basis Received Basis Arrears of salary


What is included in salary?
Section:-17:-

 Wages
 Annuity and Pension
 Fee, Commission, Perquisite/profit in lieu of /addition to salary
 Advance Salary
 Leave Salary /leave enchasement
 Annual accretion standing to the credit of an employee in his Recognized Provident Fund Account
 Transferred Balance
 Annual amount contributed by Central Govt.
Perquisites:-casual emoluments/benefits attached to an officer/position in addition to salary/wages
 Perquisites may be in kind/cash.
 These should be given during continuation of services & be directly depend upon services.
 Perquisites may be regular/recurring/casual/non-recurring.

INCOME FROM SALARY =GROSS ANNUAL SALARY-DEDUCTIONS

Deduction (Section-16)
(a)Deduction regarding entertainment allowance
 Only Govt.employees can claim this deduction.
 Deduction is the least of the:-a)Amount received b)20% salary c)Rs.5, 000
(b)Deduction regarding professional tax:-Article 276 of the constitution: - maximum professional tax
which can be levied by the local authority is Rs.2500.
Allowances
Allowances are fixed monetary amount received by the employee from his employer for specific purpose
which may be official/personal.
Types of Allowances
__________________________________________________________________________________

Exempted Deducted Partly Taxable Fully Taxable


Allowance Allowance Allowance Allowance
PROVIDENT FUND
Under this scheme fund is set up by the employer for his employees. A sum of amount is contributed by
the employer from his taxable salary and same amount is contributed by the employer which keeps on
accumulating year after year.

TYPES OF PROVIDENT FUND


__________________________________________________________________________________

Statutory/General Recognized Unrecognized Public


Provident Fund Provident Fund Provident Fund Provident Fund

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