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Salaries
Salaries
Sec.15,16,and 17 of the income tax Act deal with the computation of income under the head salaries. Important concepts. Employer and employee relationship. Surrender of salary. Place of Accrual(sec.9(1). Tax free salary. Foregoing of salary. Salary paid by Foreign Govt/ Enterprise. Salary due or received in foreign currency. How to compute salary in the grade system.
Basis of charge(sec.15)
As per sec.15, the following income shall be chargeable to income tax under the head Salaries: Any salary due from an employer or a former employer to an assessee in the previous year, whether paid in the previous year or not. Any salary paid or allowed to him in the previous year by or on behalf of an employer or former employer though not due in that previous year or before it became due to him, Any arrears of salary paid or allowed to him in the previous year by or on behalf of an employer or a former employer, if not charged to income tax in any earlier previous year. Arrear of salary. Basis of Accounting.
Meaning of Salary.
Sec.17(1) gives an inclusive definition of Salary. Salary includesWages, Any annuity or pension, Any gratuity, Any fee, commission, perquisites or profit in lieu of or in addition to any salary or wages, Any advance of salary, Any payment received by an employer in respect of any period of leave not availed by him, The annual accretion to the balance to RPF in excess of 12% of employees salary and interest in excess of 9.5% p.a.etc.
Special allowances which are exempt to the extent of actual amount received.
Travelling allowance, Daily allowance, Conveyance allowance, Helper allowance, Academic allowance, Uniform allowance,
Allowances to meet personal exp.which are exempt to the extent of amount received or limit specified,
Allowances to meet personal exp.where exemption is allowed upto certain % of amount received. Allowance allowed to transport employee,(70% of expenditure or Rs 6000 whichever is less).
Perquisites.
Perquisites are the benefits or amenities in cash or kind, or in money or moneys worth and also amenities which are not convertible into money, provided by the employer to the employee whether free of cost or at a concessional rate. Their value , to the extent go to reduce the expenditure that the employee normally would have otherwise incurred in obtaining these benefits and amenities, is regarded as part of the taxable salary.