INCOME FROM SALARY

DIGAMBAR SAMEEN SAMAR ASIL ASIL HALGE

AKHIL NAIR

ANIKET HARPREET KHOT PANESAR

SALARY Salary is a periodical payment for Services rendered by an employee to an employer. • Any advance for Salary. • Any payment received by an employee while in service in respect of any period of leave not availed of by him. perquisites or profits in lieu of or in addition to any salary or wages. commission. leave encashment) .17(1) of the Income Tax Act. However under sec. ( i. following items are also included : • • • • Wages Any annuity or pension Any Gratuity Any Fees.e.

Performance Bonus etc. • Bonus : It is a payment made under a service agreement between the employer & employee. . which may be in the form of Diwali Bonus.Other items included under Salary • Dearness Allowance : It is an additional payment over & above the basic Salary for meting the high cost of living. • Commission / Incentive : If an employee is appointed on a fixed monthly salary plus commission as a percentage of revenue or sales then the said commission shall also be included in his Salary.

.PENSION • In general. a pension is an arrangement to provide people with an income when they are no longer earning a regular income from employment.

employees Taxable for all employees Fully exempt Other Cases Receiving Gratuity 1/2 is exempt 1/3 is exempt .Pension Commuted Uncommuted Govt. employees Non Govt.

PERQUISITES “Perquisite” may be defined as any casual emolument or benefit attached to an office or position in addition to salary or wages. .

(ii) Any sum paid by employer in respect of an obligation which was actually payable by the assessee. .(i) Value of rent-free/concessional rent accommodation provided by the employer.

(v) the value of any other fringe benefit or amenity as may be prescribed. to the extent it exceeds one lakh rupees. (iv) The amount of any contribution to an approved superannuation fund by the exployer in respect of the assessee. .(iii) Value of any benefit/amenity granted free or at concessional rate to specified employees etc.

ALLOWANCES Allowance is defined as a fixed quantity of money or other substance given regularly in addition to salary for meeting specific requirements of the employees. .

per month 2.Exemptions under Sec.per month per child upto max.300/. of 2 children .800/.10(14) Nature of Allowance Extent to which Exempt 1.per month per child upto max.100/. Conveyance Allowance Rs. of 2 children 3. Allowance to meet the hostel expenditure of the child Rs. Children Education Allowance Rs.

Kolkata.House Rent Allowance least of the following : (i) HRA received. (iii) 40% of Salary (50% in case of Mumbai. (ii) Rent paid less 10% of salary. Chennai. Delhi) Leave Travel Allowance The amount actually incurred on performance of travel on leave to any place in India by the shortest route to that place is exempt. .

1.10000/.80CCC: Contribution towards pension plans subject to a maximum payment of Rs. . ELSS Mutual Fund & Housing Loan principal repayment.a.80C & 80CCC is restricted to Rs. 2. PF.Deductions available from Salary (Way to save your TAX ) 1.80C: Amount invested in specified savings like Life Insurance Premium.Deduction U/s. PPF.00 Lac p.Deduction U/s.It may however be noted that the overall ceiling for investment U/s. NSC.

a.a.80D: Medical insurance premium paid for the health of the individual and spouse or dependent parents or dependent children subject to a maximum of Rs.10000/-p. . or Rs.50000/.p.80DD: Expenditure incurred for maintenance and medical treatment of a dependent who is a person with disability subject to deduction of Rs.Deduction U/s. 4. if such person has severe disability as mentioned in the provision.Deduction U/s.3.75000/-p.a.

5.80E: Expenditure incurred on interest on loan (and not repayment of principal amount) taken from any financial institution for the purpose of higher education.100% of interest repayment is allowed as a deduction for 8 successive years beginning from the year in which the repayment starts.Deduction U/s. .

GOVERNMENT EMPLOYEES : Gratuity received by Central and State Govt. employees.GRATUITY 1. . Defence employees and employees in Local authority shall be exempt.

000 (c) Amount recieved .2. (b) The amount of gratuity as calculated above shall not exceed Rs.3. gratuity shall be exempt to the extent of fifteen days Salary based on the rate of Salary last drawn by the concerned employee. OTHER EMPLOYEES : (covered under payment of gratuity act ) (a)For every completed year of service or part thereof.50.

2.3. OTHER EMPLOYEES : (not covered under payment of gratuity act ) Gratuity received shall be exempt subject to the following limits whichever is the least:1. Exemption shall be limited to half month salary for each completed year of service. Rs.3.5 Lakhs 3. Amount received .

3. employees – Fully exemt (B) Other employees (Exemption will be least of the following) : (a) Cash equivalent of unutilized earned leave (earned leave entitlement can not exceed 30 days for every year of actual service) (b) 10 months average salary (c) Leave encashment actually received. Any leave encashment when employee is in service – Fully taxable Any leave encashment when the employee has resigned or retired : (A) Govt.00. 2.LEAVE ENCASHMENT 1. This is further subject to a limit of Rs.000 .

PROVIDENT FUND Statutory Provident Fund Employers Contribution Employee Contribution Interest Income (both employer and employee ) Lump sum Payment on Retirement or Termination Exempt Recognised Provident Fund Exempt upto 12% of salary Claim Section 80C Unrecoganised Provident Fund Exempt Claim Section 80C ---------------- Exempt Exempt upto 9. if specified Employee – Exempt conditions are Employer – Taxable fulfilled Interest on both .Taxable .5% Exempt Exempt Exempt.

4. retrenchment compensation or provident fund Any sum received under a keyman insurance ploicy including the sum allocated by the way of bonus on such policy. whether in lumpsum or otherwise. 3. (a) (b) .PROFITS IN LIEU OF SALARY 1. pension . by any assessee from any person – Before his joining any employment with the person or After cessation of his employment with that person. Any compensation due to an assessee from his employer in conection with the termination of his employment or the modification relating thereto. Any amount due to or received . 2. Any payment for gratuity.

Sign up to vote on this title
UsefulNot useful