Income from Salary

Basis of Taxation: Receipt basis

Deductions: Deductions are not allowed in Salary
Items
Pay, Wages, leave pay, Overtime
payment, bonus, commission,
Fee, work condition supplements
Expenditure reimbursement
All Cash allowances (Except
medical allowance)
Amount paid to enter into
employment relationship
Amount paid to fulfill any
conditions to employment
Amount paid on termination of
employment (Including golden
handshake receipts)
Treatment
Fully Taxable
Fully taxable. However, expenses
reimbursed to meet official duty
are not taxable
Fully taxable. However
allowances paid to meet official
duty are not taxable
Fully Taxable
Fully Taxable
Two options:
1- Normal way of calculation
2- Average rate method

Conveyance provided to employee 5% of Cost or FMV of vehicle

(Partly for personal & partly for depending on whether it is
official use) purchased in cash or taken on
lease
Conveyance provided to employee 10% of Cost or FMV of vehicle
(Only for personal use) depending on whether it is
purchased in cash or taken on
lease
Conveyance provided to employee
(Only for official use)
Services of housekeeper, driver,
gardener or other domestic
assistant are provided to
employee
Utility Services provided
Interest benefit in respect of
Interest free loan to employee
Interest benefit in respect of loan
provided at interest rate which is
lower than benchmark rate
Waiver of loan payable by
employee to employer
Liability of employee towards third
party paid by employer
Accommodation provided
No treatment
Total salary paid to these persons
by employer less amount
contributed by employee to
employer for receiving these
services is Taxable
FMV of Utilities provided less
amount paid by employee to
employer for receiving these
services is taxable
Interest calculated @ 10% is
Taxable
Interest calculated @ (10% -
Interest rate charged by
employer) is Taxable
Amount of loan waived is taxable
Amount paid by employer is
Taxable
Higher of following is added:
1- 45% of Basic Salary or
2- Amount that would have
been paid had no
accommodation been
provided by employer