INCOME FROM SALARY

PROJECT ON:INCOME FROM SALARY

INCOME FROM SALARY

INCOME FROM SALARY

WE ARE HIGHLY AKNOWLEDGED TO THANK THE FOLLOWING PEOPLE IN OUR PROJECT COMPLETION.

FIRSTLY WE WOULD LIKE TO THANK PROF. A. E LAKDAWALA FOR GIVING US A CHANCE TO DEVELOP OURSELVES.

ALSO WE WOULD LIKE TO THANK FROM THE BOTTOM OF THE HEART PROF. RESHMA FOR HELPING AND GUIDING US AT EVERY STEP.

LASTLY, WE WOULD LIKE TO THANK OUR PARENTS FOR HAVING FAITH IN US AND SHOWING US THE RIGHT WAY.

THANK YOU.

COMPILED BY:3

INCOME FROM SALARY

SUBMITTED TO:PROF-RESHMA
SABINA MUSA

15 17 26 31 33

BHAKTI YAMUNA MUSTAFA KESARYA MOIZ PAKITWALA

INDEX
INTRODUCTION HEADS OF INCOME MEANING OF SALARY 4 5 6
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INCOME FROM SALARY

INCOMES FORMING PART OF SALARY BASIC SALARY FEES, COMMISSION AND BONUS TAXABLE VALUE OF ALLOWANCES 1. FULLY TAXABLE ALLOWANCES 2. PARTIALLY EXEMPT ALLOWANCES 3. FULLY EXEMTED ALLOWANCES RELEVANT FOR THE HEAD "SALARIES" COMPUTATION OF INCOME SUMS BIBLOGRAPHY 8 9 10 11 13 16 17 20 23 28

INTRODUCTION
Income means a receipt in the form of money or moneys worth which is derived from definite source with some sort of regularity or expected regularity. These definite sources of income are salaries, house property, business or profession, capital gains and any other source. If an income is not derived from any of these
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INCOME FROM SALARY

sources, it is not taxable under the income tax act, 1961 (hereinafter referred as act). For example, if a person finds a purse containing rs.1000 on road, it is not treated as income since it is not received from any definite source. We have also learnt that scope of total income is determined with reference to residential status of a person i.e. total income of each person is based on his residential status. Once we know what incomes of a person are taxable, then we need to know how to compute total taxable income according to the provisions of Income Tax Act. First we define the concept of salary income i.e. what are the characteristics, which make an income fall under this head. Then, incomes falling under this head are enumerated, followed by the detailed descriptions of income tax provisions regarding three of these incomes. The description of remaining two incomes forming part of salary will be covered in the next lesson along with procedure for computation of salary income. Finally, all the provisions covered in this lesson are summarized for the sake of convenience.

HEADS OF INCOME
Income of a person is classified into 5 categories. Thus, income belonging to a particular category is taxed under a separate head of income pertaining to that category. Section 14 of the Act, has classified five different heads of income for the purpose of computation of total income. The five heads of income are: 1) Income under the head salaries (Section 15 17)
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INCOME FROM SALARY

2) 3) 4) 5) Income from house property (Section 22 27) Profits and gains from business or profession (Section 28 44) Capital gains (Section 45 55) Income from other sources (Section 56 59)

It may be noted here that an income belonging to a specific head must be computed under that head only. If an income cannot be placed under any of the first four heads, it will be taxed under the head Income from other sources. Certain expenses incurred in earning incomes under each head are allowed to be deducted from its gross income according to the provisions applicable to that specific head. Then, the net income under various heads is aggregated together to compute gross total income of the person. After making certain deductions which are allowed from gross total income (relating to certain expenses incurred or payments made or certain incomes earned) we arrive at the figure of total income for taxation purpose.

MEANING OF SALARY
Salary, in simple words, means remuneration of a person, which he has received from his employer for rendering services to him. But receipts for all kinds of services rendered cannot be taxed as salary. The remuneration received by professionals like doctors, architects, lawyers etc. cannot be covered under salary since it is not received from their employers but from their clients. So, it is taxed under business or profession head. In order to understand
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INCOME FROM SALARY

what is included in salary, let us discuss few characteristics of salary.

Characteristics of Salary
1. The relationship of payer and payee must be of employer and employee for an income to be categorized as salary income. For example: Salary income of a Member of Parliament cannot be specified as salary, since it is received from Government of India which is not his employer. 2. The Act makes no distinction between salary and wages, though generally salary is paid for non-manual work and wages are paid for manual work. 3. Salary received from employer, whether one or more than one is included in this head.

4. Salary is taxable either on due basis or receipt basis which ever matures earlier: i) Due basis when it is earned even if it is not received in the previous year. ii) Receipt basis when it is received even if it is not earned in the previous year. iii) Arrears of salary- which were not due and received earlier are taxable when due or received, which ever is earlier.

INCOME FROM SALARY

5. Compulsory deduction from salary such as employees contribution to provident fund, deduction on account of medical scheme or staff welfare scheme etc. is examples of instances of application of income. In these cases, for computing total income, these deductions have to be added back.

INCOMES FORMING PART OF SALARY

Section 17 of the Act gives an inclusive definition of salary. Broadly, it includes: 1. Basic salary
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INCOME FROM SALARY

2. 3. 4. 5. Fees, Commission and Bonus Taxable value of cash allowances Taxable value of perquisites Retirement Benefits

Although, all the components of salary income are included in salary, there are certain incomes in each of these categories, which are either fully exempt or exempt up to a certain limit. The aggregate of the above incomes, after the exemption(s) available, if any, is known as Gross Salary. From the Gross 33 Salary, the following three deductions are allowed under Section 16 of the Act to arrive at the figure of Net Salary: 1. Standard deduction - Section 16 (i) 2. Deduction for entertainment allowance Section 16 (ii) 3. Deduction on account of any sum paid towards tax on employment Section 16(iii).

BASIC SALARY
All employees are entitled to a basic salary which is fixed as per their respective terms of employment either as a fixed amount or at a graded system of salary. Under this graded system, apart from the basic salary at which the employee will start, annual increments to be given to the employee are pre fixed in the grade. For example, if a person is employed on 1st May, 2004 in the grade of 12000 300 15000, this means that he will start at a
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INCOME FROM SALARY

basic salary of Rs.12000 from 1st May, 2004. He will get an annual increment of Rs.300 i.e. 1st May, 2005 and onwards every year on the same date till his basic salary reaches Rs.15, 000. No further increment is given thereafter till he is promoted and placed in other grade. Advance Salary, if received in previous year for next year is taxable on receipt basis in the same previous year. Illustration: - 1) X joins service in the grade of Rs.12000 300 13800 400 17800 on 1st June, 1999. Compute his basic salary for the previous year 2005-06. Solution: For the previous year 2005-06, basic salary of X will be calculated as follows:
1st June 1999 31st May 2000 1st June 2003 31st May 2004 1st June 2000 31st May 2001 12300 1st June 2004 31st May 2005 1st June 2001 31st May 2002 12600 1st June 2005 31st May 2006 1st June 2002 31st May 2003 12900 1st June 2005 31st May 2006 Basic Salary for April and May 2005 Rs.13500 x 2) Basic Salary for June 2005 March 2006 (Rs.13800 x 10) Basic Salary for previous year 12000 13200 13500 13800 13800 27,000 1, 38,000 1, 65,000

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INCOME FROM SALARY

FEES, COMMISSION AND BONUS

Any fees or commission paid or payable to an employee is fully taxable and is included in salary. Commission payable may be at a fixed amount or a fixed percentage of turnovers. In both the cases, it is taxable as salary only when it is paid or payable by the employer to the employee. When commission is based on fixed percentage of turnover achieved by employee, it is included in basic salary for the purpose of grant of retirement benefits and for computing certain exemptions that we will discuss later on.

TAXABLE VALUE OF ALLOWANCES

Allowance is a fixed monetary amount paid by the employer to the employee (over and above basic salary) for meeting certain
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INCOME FROM SALARY

expenses, whether personal or for the performance of his duties. These allowances are generally taxable and are to be included in gross salary unless specific exemption is provided in respect of such allowance. For the purpose of tax treatment, we divide these allowances into 3 categories: I. Fully taxable cash allowances II. Partially exempt cash allowances III. Fully exempt cash allowances

I. FULLY TAXABLE ALLOWANCES:This category includes all the allowances, which are fully taxable. So, if an allowance is not partially exempt or fully exempt, it gets included in this category. The main allowances under this category are enumerated below: (i) Dearness Allowance and Dearness Pay As is clear by its name, this allowance is paid to compensate the employee against the rise in price level in the economy. Although it is a compensatory allowance against high prices, the whole of it is taxable. When a part of Dearness Allowance is converted into Dearness Pay, it becomes part of basic salary for the grant of retirement benefits and is assumed to be given under the terms of employment. (ii) City Compensatory Allowance This allowance is paid to employees who are posted in big cities. The purpose is to compensate the high cost of living in cities like Delhi, Mumbai etc. However, it is fully taxable. (iii) Tiffin / Lunch Allowance It is fully taxable. It is given for lunch to the employees. (iv) Non practicing Allowance This is normally given to those professionals (like medical doctors, chartered accountants etc.) who are in government service and
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INCOME FROM SALARY

are banned from doing private practice. It is to compensate them for this ban. It is fully taxable. (v) Warden or Proctor Allowance These allowances are given in educational institutions for working as a Warden of the hostel or as a Proctor in the institution. They are fully taxable. (vi) Deputation Allowance When an employee is sent from his permanent place of service to some place or institute on deputation for a temporary period, he is given this allowance. It is fully taxable. (vii) Overtime Allowance When an employee works for extra hours over and above his normal hours of duty, he is given overtime allowance as extra wages. It is fully taxable. (viii) Fixed Medical Allowance Medical allowance is fully taxable even if some expenditure has actually been incurred for medical treatment of employee or family. (ix) Servant Allowance It is fully taxable whether or not servants have been employed by the employee. (x) Other allowances There may be several other allowances like family allowance, project allowance, marriage allowance, education allowance, and holiday allowance etc. which are not covered under specifically exempt category, so are fully taxable.

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II.

PARTIALLY EXEMPT ALLOWANCES:-

This category includes allowances which are exempt up to certain limit. For certain allowances, exemption is dependent on amount of allowance spent for the purpose for which it was received and for other allowances, there is a fixed limit of exemption. (i) House Rent Allowance (H.R.A.): An allowance granted to a person by his employer to meet expenditure incurred on payment of rent in respect of residential accommodation occupied by him is exempt from tax to the extent of least of the following three amounts: a) House Rent Allowance actually received by the assessed. b) Excess of rent paid by the assessed over 10% of salary due to him. c) An amount equal to 50% of salary due to assessed (If accommodation is situated in Mumbai, Kolkata, Delhi, Chennai) Or an amount equal to 40% of salary (if accommodation is situated in any other place). Salary for this purpose includes Basic Salary, Dearness Allowance (if it forms part of salary for the purpose of retirement benefits), Commission based on fixed percentage of turnover achieved by the employee. The exemption of HRA depends upon the following factors: (1) Basic Salary (2) Rent paid (3) Place of residence (4) HRA received If an employee is living in his own house and receiving HRA, it will be fully taxable. Illustration 2):15

INCOME FROM SALARY

Mr. X is employed in A Ltd. getting basic pay of Rs.20, 000 per month and dearness allowance of Rs.7, 000 per month (half of the dearness allowance forms part of salary for the purpose of retirement benefits). The employer has paid bonus @Rs.500 per month, Commission @1% on the sales turnover of Rs.20 lakhs, and house rent allowance of Rs.6, 000 per month. X has paid rent of Rs.7,000 per month and was posted at Agra. Compute his gross salary for the assessment year 2006-07.

Solution: Computation of Gross Salary Basic Salary (Rs.20,000 x 12) Dearness Allowance (Rs.7,000 x 12) Bonus (Rs.500 x 12) Commission (1% of Rs.20,00,000) House Rent Allowance (Rs.6,000 x 12 Amount exempt Rs.53,800) Gross Salary: Amount / Rs. 2,40,000 84,000 6,000 20,000 18,200 3,68,200

Amount of HRA exempt is least of 3 amounts: 1. 40% of Salary (Rs.2,40,000 + Rs.42,000 + Rs.20,000) 2. Actual HRA received (Rs.6, 000 x 12) 3. Rent paid (Rs.7, 000 x 12 10% of salary Rs.30, 200) Amount of HRA exempt is = = Rs.3,02,000 = Rs. 72,000 Rs. 53,800 = Rs. 53,800

(ii) Entertainment Allowance: This allowance is first included in gross salary under allowances and then deduction is given to only central and state government employees under Section 16 (ii).

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(iii) Special Allowances for meeting official expenditure: Certain allowances are given to the employees to meet expenses incurred exclusively in performance of official duties and hence are exempt to the extent actually incurred for the purpose for which it is given. These include travelling allowance, daily allowance, conveyance allowance, helper allowance, research allowance and uniform allowance. (iv) Special Allowances to meet personal expenses: There are certain allowances given to the employees for specific personal purposes and the amount of exemption is fixed i.e. not dependent on actual expenditure incurred in this regard. These allowances include: a) Children Education Allowance: This allowance is exempt to the extent of Rs.100 per month per child for maximum of 2 children (grand children are not considered). b) Children Hostel Allowance: Any allowance granted to an employee to meet the hostel expenditure on his child is exempt to the extent of Rs.300 per month per child for maximum of 2 children. c) Transport Allowance: This allowance is generally given to government employees to compensate the cost incurred in commuting between place of residence and place of work. An amount uptoRs.800 per month paid is exempt. However, in case of blind and orthopedically handicapped persons, it is exempt up to Rs. 1600p.m. d) Out of station allowance: An allowance granted to an employee working in a transport system to meet his personal expenses in performance of his duty
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INCOME FROM SALARY

in the course of running of such transport from one place to another is exempt up to 70% of such allowance or Rs.6000 per month, whichever is less.

III. FULLY EXEMPT ALLOWANCES

(i) Foreign allowance This allowance is usually paid by the government to its employees being Indian citizen posted out of India for rendering services abroad. It is fully exempt from tax. (ii) Allowance to High Court and Supreme Court Judges of whatever nature are exempt from tax. (iii) Allowances from UNO organization to its employees are fully exempt from tax.

RELEVANT FOR THE HEAD "SALARIES"

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It is not true that every income received by an employee from his employer is taxable. Any income falling within any of the following paragraphs shall not be included in computing the income from salaries: (1) The value of any travel concession or assistance received by or due to an employee from his employer or former employer for himself and his family, in connection with his proceeding (a) on leave to any place in India or (b) on retirement from service, or, after termination of service to any place in India is exempt under clause (5) of Section 10 subject, however, to the conditions prescribed in rule 2B of the I.T. Rules, 1962. (2) Death-cum-retirement gratuity or any other gratuity which is exempt to the extent specified from inclusion in computing the total income. (3) Any payment in commutation of pension received under the Civil Pension (Commutation) Rules of the Central Government or under any similar scheme applicable to the members of the Civil/Defense services under the Union/State/Local Authority or a Corporation established by a Central, State or Provincial Act. Payments in commutation of pension received under any scheme of any other employer, exemption will be governed by the provisions of Section 10(10A) (ii). (4) Any payment received by an employee of the Central /State Government, as cash-equivalent of the leave salary in respect of the period of earned leave at his credit at the time of his retirement on superannuation or otherwise, is exempt. In the case of other employees it is subject to a maximum of ten month's leave. This exemption has an overall max. limit of Rs. 2,40,000 [S.0.1015 (E) dated 27.11.97).

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(5) Under Section 10(10B), the retrenchment compensation received by a workman is exempt from income-tax subject to certain limits. (6) Under Section 10(10C), any payment received by an employee of the notified bodies at the time of his voluntary retirement or termination of his service, in accordance with any scheme or schemes of voluntary retirement or in the case of public sector company, a scheme of voluntary separation, is exempted to the extent that such amount does not exceed five laky rupees (7) Any sum received under a Life Insurance Policy, including the sum allotted by way of bonus on such policy other than any sum received under sub-section (3) of Section 80DDA. (8) Any payment from a Provident Fund to which the Provident Funds Act, 1925 (19 of 1925), applies. (9) Under Section 10(13AJ of the Income-tax Act, 1961, any special allowance specifically granted to an assessee by his employer to meet expenditure incurred on payment of rent (by whatever name called) in respect of residential accommodation occupied by the assessee is exempt from Income-tax to the extent as may be prescribed. (10) Under section 10(14) exemption of notified allowances is provided. The CBDT has prescribed guidelines for the purpose of classes (i) and (ii) of Section 10(14) vide Notification No.SO617(E) dated 7th July/ 1995 (F.No.l42/9/95TPL)which has been amended vide Notification SO No.403(E) dated 24.4.2000 (F,No.l42/34/99-TPL). 11) Under Section 10(15)(iv)(i) of the Income-tax Act, interest payable by the Government on deposits made by an employee of the Central Government or a State Government or a public sector company from out of his retirement benefits, in a notified scheme, is exempt.

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(12) Income by way of pension received by an individual or family pension received by any member of the family of an individual who has been in the service of the Central Government or State Government and has been awarded 'Param Vir Chakra" or "Maha Vir Chakra" or "Vir Chakra" or such notified gallantry award, is exempt. (13) Under Section 17 of the Act, exemption from tax will also be available, under prescribed conditions, in respect of any medical treatment provided to an employee or any member of his family or premium paid by the employer in respect of approved medical insurance taken for his employees or reimbursement of insurance premium to the employees for such medical insurance for the employee or his family members.

COMPUTATION OF INCOME
This section contains only salient features for computation of income. The sections in this topic are as under: Salary income House Property income Capital Gains Other Sources Income
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Deductions Rebates

Salary Income
Salary normally includes wages, annuity, pension, gratuity, commission, perquisites, etc. and any other payment received by an employee from the employer received during the year.

House Property Income

Tax is on the annual value of the house property after allowing certain deductions. House Property consists of any building, flat, shop etc., and the land attached to the building.

Capital Gains
If any Capital Asset is sold or transferred, the profits arising out of such sale are taxable as capital gains in the year in which the transfer takes place.

Other Sources Income

Any income other than (a) salary, (b) house property income (c) Income from business or profession, or (d) Capital Gains income, will be taxed as Income from Other Sources. Examples are interest from deposits, winnings from lotteries, races, income from the hiring out of machinery, or machinery compositely with building,
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royalty, copyright fees, family pension, dividends other than from domestic companies and mutual funds etc.

Deductions
Deduction is the amount, which is reduced from the gross total income before computing tax. There are other deductions such as for donations, for repayment of loans taken for educational purposes etc.

Rebates
For the assessment year 2003-04, the amount of rebate is as follows 1. Tax rebate under section 88 is available at 30% of the net qualifying amount if the following two conditions are satisfied. a. income chargeable under the head "Salaries" (before giving deduction under section 16) does not exceed Rs. 1,00,000; and b. income chargeable under the head "Salaries" is not less than 90% of gross total income. 2. If gross total income does not exceed Rs. 1,50,000 ,tax rebate is available at 20% of the net qualifying amount. 3. If gross total income exceeds Rs. 1,50,000 but does not exceed Rs. 5,00,000, tax rebate is available at 15% of the net qualifying amount.

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4. If gross total income exceeds Rs. 5,00,000 tax rebate under section 88 is not available. Rebate for senior citizens Taxpayers of the age of sixty-five and above, at any time during the relevant previous year, will get an additional rebate from tax payable up to a maximum of Rs 20,000/-. Rebate for women taxpayers All women resident in India get a special rebate up to Rs. 5,000/out of the tax payable by them. This rebate will not be allowable for women tax payers above sixty five at any time during the relevant previous year, who will get senior citizen rebate of Rs. 20,000/-.

SUMS
1.

A, covered under the Payment of Gratuity Act, 1972 retired on 30-8-2009. At the time of retirement, he was getting basic salary of Rs. 10000 p.m. & Dearness Allowance @10% of the basic salary. He had joined the company on 1-4-1992. He was paid gratuity of Rs. 125000. Compute the amount of Gratuity taxable for the assessment year 2010-11.

SOLUTION:

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Salary last drawn: 1000 Period of Service: 15 days salary : Gratuity Exempt : 107885 125000 e) Gratuity Taxable : 125000- Rs. 107885 = Rs.11000 p.m. 17 years & 5 months, rounded off to = 17 years. 17 years * Rs. 11000 * 15 / 26 = Rs. 107885. Least of a) 15 days salary = Rs. b) Rs. 350000 c) Received = Rs. Exempt Received less Exempt = Rs. = Rs. 107885 = Rs. 17115 Basic + D.A. last drawn = 10000 +

1.

Mr. A retires from X Limited on June 30, 2009. He had joined the company on 4-1-1977.He gets pension of Rs. 2000 p.m. up to 30th November 2009. On 1st December, 2009, he requests for commulation of 50% of his pension. His request is accepted & he receives Rs.75000. Compute his gross taxable salary if he has received Rs. 50000 as Gratuity, which is fully exempt from tax.

SOLUTION:

Income under Salaries Uncommuted Pension [ (Rs. 2000*5) + (Rs. 1000*4)] Commuted Pension received Less: Exempt u/s 10(10A) 50% commuted value = 75000 100% commuted value = 75000*2 = 150000 1/3 of 150000 (full commuted value) exempt

Rs 75000

Rs 14000

50000

25000

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Gross Taxable Salary 39000

3. Mr. Penpusher retires from Government Service on 30-92009. From 1-11-2009 he joined as Superintendent of Nursing Home. He Furnishes the following particulars for the previous year ending 31-3-2010. Compute his taxable salary for the Assessment year 2010-11. Basic pay & D.A up to 30-9-2009 Entertainment allowance from Government up to 30-9-2009 Pension p.m. from 1-10-2009 @ 1500 Leave Salary in respect of earned leave to his credit Gratuity Provident Fund Commuted Pension Salary from Nursing Home SOLUTION: 60000 5000 9000 13500 110000 150000 32000 30000

Computation of Income from Salaries of Mr. Penpusher.

Previous Year: 2009-10 Years: 2010-11 Assessment

Particulars A) Salary & Allowances Basic & DA ( as Govt. Employee) Entertainment allowance ( as Govt. Employee) From Nursing Home B) Pension Uncommuted Commuted [fully exempt u/s 10(10A) being Govt. Employee

Rs. 60000 5000 30000

Rs.

95000 9000 -

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Gratuity Fully exempted u/s 10(10) being Govt. Employee D) Profit in Lieu of Salary Payment from Statutory P.F. Exempt u/s 10(11) E) Leave Encashment Fully exempt u/s 10(10AA) being Govt. Employee F) Gross Taxable Salary (a to e) G) Less: Deduction under S.16 Entertainment Allowance [Least of (a)1/5* basic 60000, (b)Rs.5000, (c)Received Rs.5000] H) Net Taxable Salary (f-g)
C)

104000 5000 99000

1. X, the general manager of Y Ltd. Retired on December 31, 2009 after 30 years of service. The Particulars of his income are as follows: a) Salary Rs. 8000 p/m. from January 1, 2009. House rent allowance Rs. 3000 p.m. from January 1, 2009 b) Medical expenses reimbursed by employer: RS. 26400 for the period from April 1,2009 which includes Rs.5000 paid to a government hospital. c) He lives in a rented house in Delhi & pays Rs.4000 p.m. as rent ( exempt HRA Rs. 27000) d) X receives Rs. 150000 as gratuity. He is not covered by the Payment of Gratuity Act,1972. e) He received Rs.160000 for encashment of leave, being 10 months leave not availed of. Compute Xs income for the assessment year 20102011.

SOLUTION:27

INCOME FROM SALARY

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Particulars a) Salary & Wages Basic Salary (8000*9) b) Allowances House Rent Allowance(3000*9) Less: Exempt u/s 10(13A) c) Gratuity Gross Less: Exempt u/s 10(10) Other Employee- Lower of a)Average Salary of last 10 months * 1/2 *years of service(8000*1/2*30
120000

RS.

RS.
72000

27000 (27000) 150000

b)Notified Amount
350000

c) Actually received
150000

120000

30000

d) Perquisites Reimbursement of medical expenses (WN1) d) Leave Encashment Gross: Less: Exempt u/s 10(10AA) Non- Govt. Employee- least of a) encashment of earned leave (@ 30 days p.a.) [WN2]
80000 b) 10* Average Salary for last 10 month 80000 c) Notified Amount 300000 d) Amount Actually received 160000

6400

160000

80000

80000 188400

e) Gross Taxable Salary f) Less: Deduction u/s 16

188400

g) Net Taxable Salary (Gross Deductions) 188400

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Working Notes:
1.

2.

Reimbursement of medical expenses up to Rs 15000 is exempt from tax. Reimbursement of expenditure incurred by the employee for medical treatment in a Government hospital is not taxable. Cash equivalent of unveiled leave to the credit of employee at the time of retirement (i.e. at the rate of Rs. 8000 per month for 10 months).

CONCLUSION

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We would like to conclude our topic by saying that Income means a receipt in the form of money or moneys worth. These definite sources of income are salaries, house property, business or profession, capital gains and any other source. Salary, in simple words, means remuneration of a person, which he has received from his employer for rendering services to him. But receipts for all kinds of services rendered cannot be taxed as salary. Salary is taxable either on due basis or receipt basis which ever matures earlier. Any fees or commission paid or payable to an employee is fully taxable and is included in salary.

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www.wikipedia.org www.encyclopedia.com www. salaryincome.com

Books referred
51 INCOME TAX TIPS FOR INVESTORSFROM SUBHASH LAKHOTIA A GUIDE ON TAX AUDIT 2008-2009 FROM HC GUPTA AND TH GUPTA

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