UNIT II

INCOME UNDER THE HEAD SALARIES

MEANING:
Under section 17 (1) the term salary includes any payment received from an
employee by an employer cash kind or as a facility. In other words section 17 (1) it is the
monetary compensation paid by an employer to the employees.

DEFINITION:
Any remuneration received by an employee in consideration of services rended to
his employer is called salary. Salary includes monitory value or those benefits and facilities
provided by the employer which are taxable.

FEATURES OF SALARY :
Any amount due to or received by an employee from an employer and falling within
the purview of the meaning of the term salary is chargeable to tax under the head salaries
and income can be taxed under the head salaries if it will fill the following characteristics:

1. Employer employee relationship

2. Salaries and business profits
3. Salaries and professional income
4. Voluntary surrender of salary real and fictional
5. Salary from former employer present employer or prospective employer
6. Personal gifts under the voluntary payments
7. Tax free salary
8. Gross salary due to the employee
9. Salary or pension received by Uno employees
10. Leave salary or pension paid to legal heirs
11. Previous year of salary income
12. Salary taxable on due or receipt basis earlier
DUE DATE OF SALARY:
Following are the rules relating to due date of salary :

1. GOVERNMENT AND SEMI GOVERNMENT EMPLOYEES:

Salary becomes due on first of every month salary for a particular month is
do you want first of the next month this in such a case salary from the month of
March of the preceding financial year up to the salary for the month of February of the
current year is taken into account salary of March payable on April 1st become a part of
taxable income of current year salary received from first April to next year first March
become taxable in the financial year.

2. EMPLOYEES OF BANK AND NON GOVERNMENT BODIES:

Salary for a particular month is due on the last date of the same month does
in such a case salary from April of the current financial year up to the salary for the
month of March of the current financial year is taken into account.

Salary received on 30th April to the salary received on 31st March of next
year become taxable in a financial year.

PLACE OF ACCRUAL OF SALARY:

Salary is deemed to a true or arise at a place where services or reindered were
services are redered in India and salary for such service is paid outside India it is treated as
income deemed to accrue or arise in India.

COMPETITION OF SALARY INCOME:

Salary income is to be computer in accordance with the provisions content in section
15 16 and 17 section 15 provides scope of the head salary section 16 contents provisions
relating to deduction allowed out of gross salary income section 17 defines various items of
salary the provisions of section 15 to 17 relating to salary income or shown in the chart
given below:
 HEAD SALARY

SECTION 15, 16, 17

Salary Allowances Perquisites Profit in lieu

U/S 17 (1) U/S 17 (3) (ii) U/S 17(2) of salary

LESS DEDUCTION

Standard deduction Entertainment allowance Professional Tax

U/S 16(1a) 16 (ii) 16 (iii)

NET SALARY INCOME

Computation of Income from Salary for the Assessment Year (1.4.2025–
31.03.2026)

(Previous Year: 01.04.2024 – 31.03.2025)

PARTICULARS AMOUNT AMOUNT

Basic Salary Includes: XXX
Basic Salary XXX
Basic Pay XXX
Dearness Pay XXX
Bonus XXX
Advance Salary XXX
Arrears of Salary XXX
Commission XXX
Commission on Sales XXX
Allowances: XXX
Fully exempted allowances: XXX
Foreign allowances received any by government employee XXX
High court judges or supreme court judges recovered any XXX
other allowances XXX
Fully taxable allowances: XXX
Dearness allowances (D.A) XXX
Dearness allowances enter into pay XXX
City compensatory allowances (CCA) XXX
Entertainment allowances (EA) XXX
( Private employee ) :
Transport allowances XXX
Helper allowances XXX
Dog allowances XXX
Project allowances XXX
Wardenship deputation allowances XXX
Family allowance XXX
Lunch allowance XXX
Tiffin allowance XXX
Marriage allowances XXX
Research allowance XXX
Overtime allowance XXX
House rent allowance XXX
(-) Exempted HRA U/S10 (13A) XXX
XXX
Conveyance allowance XXX
(-) Exempted up to actual expenditure XXX XXX

Travelling allowance XXX

(-) Exempted up to actual expenditure XXX
XXX
Transport allowance XXX
(-) Exempted up to ₹ 3200 p.m ( H and B ) XXX
XXX
Children education allowance XXX
(-) Exempted up to ( ₹ 100 p.m × 2×12) XXX
XXX
Children hospital expenditure allowance XXX
(-) Exempted up to (₹300 p.m ×2×12 ) XXX
XXX
Tribal area allowance XXX
(-) Exempted up to ₹200p.m XXX
XXX
Uniform allowance XXX
(-) Exempted up to actual expenditure XXX
XXX
PERQUISITES:
Value of rent free accommodation XXX
Value of hotel free accommodation XXX
Value of perks in respect of lunch XXX
LIC premium paid by employees XXX
Professional tax paid by employees XXX
PROFITS IN LEINOF SALARY:
Employer contribution to RPF XXX
(-) Exempted up to @12% of salary XXX XXX

Interest credited to RPF XXX

(-) Exempted up to @9.5% of interest XXX XXX

Gratuity XXX
Pension XXX
Leave encashment XXX
GROSS SALARY XXX
(-) Deductions
U/S 16(i) standard deduction XXX
U/S 16(ii) entertainment allowances XXX
U/S 16(iii) professional tax XXX XXX

INCOME FROM SALARIES XXX