Taxation of Salary

SALARIES

Income shall be chargeable to income-tax under the head salaries:

• Salary due + Salary paid or allowed

NOTE:

• Any salary paid in advance is included in the total income of any person for any previous year is not included again in the total income when salary become due
• Any salary, bonus, commission or remuneration due or received by a partner shall not be regarded as 'salary'

"Salary", "Perquisite", "Profit in lieu of salary" defined

[1] SALARY

• Wages
• Pension or annuity
• Gratuity
• Fees, commission, or profit in lieu or in addition of any salary or wages
• Advance of salary
• Payment received by an employee in respect of any period of leave not availed by him
• The annual accretion to the balance at the credit of an employee participating in a recognized provident fund
• Aggregate of all sums that are comprised in the transferred balance
• Contribution made by central government or any other employer in the previous year
• Contribution made by central government in the previous year to the Agniveer corpus fund account of an individual enrolled in Agnipath scheme

[2] PERQUISITE

• Value of rent-free accommodation
• Value of any accommodation
• Value of any benefit or amenity granted at concessional rate or free of cost by a company or employer to

A. Director

B. Person who has a substantial interest

C. Any other person having salary [exclusive of perquisite] > 50,000

• Any sum paid by the employer
• Any sum payable by the employer other than a recognized provident fund or an approved superannuation fund or a deposit-linked insurance fund
• Value of any specified security or sweat equity shares allotted at free of cost or at concessional rate

For the purposes of this sub-clause

• "Specified security"
• "Sweat equity shares"
• "Fair market"
• "Option"
• "Value of any specified security or sweat equity shares

Amount or the aggregate of amounts of any contribution made by the employer

A. Recognized provident fund

B. Scheme referred to in sub-section [1] of section 80CCD

C. Approved superannuation fund>7,00,000 and 50,000 in a previous year

• Annual accretion by way of interest, dividend previous year to the balance at the credit of the fund
• Value of any other fringe benefit or amenity

Provided that nothing in the clause shall apply to

(i) Value of medical treatment

(ii) Sum paid by the employer actually incurred by the employee on his medical treatment

a. Any hospital maintained by the government

b. In respect of the prescribed diseases

c. In respect of any illness relating to COVID-19

• Premium paid by an employer in relations to an employee an insurance on health
• Sum paid by employer in respect of premium paid

Expenditure incurred:

A. Medical treatment

B. Travel for medical treatment

C. Travel and stay abroad of one attendant

Subject to the condition -

A. Expenditure on medical treatment

B. Expenditure on travel exceed from perquisite gross total income including expenditure does not exceed (2,00,000)]

Provided further:

(i) Hospital
(ii) Family
(iii) Gross total income

[3] Profit in lieu of salary

• Amount of compensation
• Any payment
• Any amount due or received

A. Before his joining

B. After cessation of his employment

Deductions from salaries

A. Standard deduction of 75,000 rupees

B. Deduction of entertainment allowance a sum equal to one-fifth of his salary

C. Deduction of sum paid of a tax on employment