Personal Taxation
Salary Income
Under the Indian Income Tax Act, 1961 tax on salary is covered under Sections 15 to 17.
  1. Section 15 : Following income shall be chargeable under the head Salary:
    • Any salary from an employer or former employer paid or allowed during the previous year, weather paid or not;
    • Arrears of Salary paid or allowed to him in the previous year by an employer or former employer if not charged in any earlier previous year.
    If the salary is paid in advance and is included in his /her total income in the previous year, it shall not be taxed again when it become due. Any salary , commission , remuneration paid to a partner of the firm from the firm , shall not be regarded as salary under this section.
  2. Section 16: Deduction from Salary : Standard deduction:
    • if the total salary is less than Rs.100000/- , deduction of Rs.25000/- or 33.33 % of the salary whichever is less ;
    • if the total salary is more thanRs.100000/- but less than Rs.500000/-, deduction of Rs.20000/- ;
    • No deduction is allowed under this section if total salary is above Rs.500000/-

    Profession Tax:

    • Any sum payable by the assessee on account of a tax on employment leviable under any law
  3. Section 17 :
    • Salary Includes:
    • Wages
    • Any annuity or pension
    • Any gratuity
    • Any fees , commission , perquisites of profit in lieu of or in addition to any salary
    • Any advance salary
    • Any payment received by an employee in respect of any period of leave not availed by him
    • Perquisite Includes:
    • The value of rent free accommodation provided to an assessee by his employer
    • The value of any concession in the matter of rent respecting any accommodation provided to the assessee by his employer
    • The value of benefit or amenity granted or provided free of cost or at concessional rate
    • The value of any specified Security allotted or transferred directly or indirectly by any person free of cost or at concessional rate , to an individual , the value of the specified securities shall be taxable in the previous year in which option is exercised by such individual.
    • Any sum paid by the employer in respect of any obligation of an employee
    • Non taxable benefits:
    • Conveyance/Transport Allowance (Actual) upto Rs,800/- p.m.
    • School education Allowance upto Rs.50/- per child p.m. for maximum 2 children.
    • Hostel expenses to Rs.150/- per child per month for maximum 2 children.
    • Any sum paid by the employer for the treatment of his employee or his family member in the hospital maintained by the employer
    • Any sum paid by the employer in respect of any expenditure actually incurred by the employee on his/ or his family members' medical treatment in any hospital maintained by Central Govt. or approved by Central Govt. and in respect of prescribed ailments , in any hospital approved by the Chief Commissioner of Income Tax.
    • Any premium paid by the employer in relation to an employee to keep in force an insurance on health of such employee or his family member under the scheme approved by Central Govt.
    • Any other medical treatment expenditure paid by an employer other than mentioned in a & b above , amount upto Rs.15000/- is tax free.
    • Any foreign travel and treatment expenses of an employee or his family member paid by the employer and is approved by RBI is exempted from perquisite. (Expenditure on travel is exempted only if the salary of the employee is less than Rs.200000/-)

There are many other aspects of Salary income , if U need further information contact us.


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