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Salary Query..

21 October 2010

Does Meaning of "Salary" under RFA includes taxable part of LTC ( not a perquisite u/s 17), Pension, Gratuity & Leave Salary...???

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5 Replies

Santhosh Poojary (SIEMPRE AHÍ PARA TI) (15607 Points)
Replied 21 October 2010

What is Salary:

Income under heads of salary is defined as remuneration received by an individual for services rendered by him to undertake a contract whether it is expressed or implied. According to Income Tax Act there are following conditions where all such remuneration are chargeable to income tax:

When due from the former employer or present employer in the previous year, whether paid or not
When paid or allowed in the previous year, by or on behalf of a former employer or present employer, though not due or before it becomes due.
When arrears of salary is paid in the previous year by or on behalf of a former employer or present employer, if not charged to tax in the period to which it relates.
What Income Comes Under Head of Salary:
Under section 17 of the Income Tax Act, 1961 there are following incomes which comes under head of salary:
Salary (including advance salary)
Wages
Fees
Commissions
Pensions
Annuity
Perquisite
Gratuity
Annual Bonus
Income From Provident Fund
Leave Encashment
Allowance
Awards

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Piyush Sanghi (CA) (172 Points)
Replied 21 October 2010

Thanks for the reply...

But this is not the answer of my Question...!!

Does Meaning of "Salary" under RFA includes taxable part of LTC ( not a perquisite u/s 17), Pension, Gratuity & Leave Salary...???

RFA --> Rent Free Accomodation

karan challani (article) (82 Points)
Replied 21 October 2010

RFA is a perquisite as per the IT act.

CA Himanshu Bansal (Risk Manager) (2345 Points)
Replied 21 October 2010

Hi Piyush,

Salary for Rent free accomodation includes basic pay, allowances,bonus or commission payable or any other monetary payment,... but it doesnot include the following :

1. DA unless forming the part of superannuation or retirement benefits.

2.Employer's contibution towards PF account of employee.

3.Allowances exempted from payment of tax.

4.VALUE OF PERQUISITES SPECIFIED IN SECTION 17(2) OF IT ACT.

5.Any payment or expenditure specifically excluded under sub clause (iii) of clause (2) (relating to ESOP) or provisoto clause (2) of Section 17( relating to medical facility or reimbursement of med expenses.)

Shiv Nath kapoor (Student) (29 Points)
Replied 21 October 2010

Salary includes “Any monetary payment (by whatever name called). It’s means it does not includes non-monetary payments”, And

Salary Does not includes “Value of perquisites (u/s17 (2))” and “Lump-sum payment ecd at the time of termination of services or superannuation or voluntary retirement, like gratuity, severance pay leave encashment, voluntary retrenchment benefits, commutation of pension and similar payments”

So above should not include in salary for the purpose of RFA.