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INCOME TO BE INCLUDED UNDER SALARY.

Simranjeet Singh (Proprietor at S Simranjeet & Associates Company Secretaries) (4396 Points)

16 February 2010

hii everyone is it necessary that a employer-employee relationship exists for the income to a person to be included under the head salary or it is more necessary that income is earned in the normal course of business.

For example a person working as a lecturer in a college also gets warden allowance from his college.then warden allowance is included under the head "salary" or "income from other sources" in this case what we have to check

1. employer-employee relationship OR

2. whether this income is earned in normal course of business.

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2 Replies

CA Reetika Agarwal (Chartered Accountant) (43 Points)
Replied 16 February 2010

Dear Simranjeet,

Ans. for your querry as follows:

"An income can be taxed under the head Salaries only if there is employer and employee relationship between the payer and payee. If this relationship does not exist, then the income would not be deemed to be income from Salary. The relation of employer and employee should be of master and servant. If it is found that there was no element of employer-employee relationship, the income is assessable under the head Income from other sources."

In your case,a person working as a lecturer in a college also gets warden allowance from his college, the allowance would be taxed under the head Salaries because it is being received from the employer by the employee although for non-academic work.

however, if this lecturer sets the question paper of a University, the remuneration which he receives for setting the paper will not be taxable under the head Salaries as the University is not the employer of the lecturer. Such remuneration would, however, be taxable under the head Income From Other Sources.

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