INCOME FROM SALARY

 Salary received by the employee from employer is called income from salary.
 Employer –employee relationship must exist.

 Salary “Salary means any amount received by an employee from an

employment. It includes any:
1. Pay

2. Wages

3. Leave pay

4. Overtime

5. Bonus

6. Gratuity

7. Fees

8. Commission

9. Allowances

10. Perquisites 1
11. Any other benefit provided by the employer to his employee

Income from Salary by NJ

INCOME FROM SALARY
Concept of Tax free Salary
Basic – Totally taxable
Bonus – Totally taxable
House Rent Allowance – Totally Taxable
Accommodation/

45 % of the basic salary or MTS –accommodation provided -Taxable

Medical Allowance –Exempt up to 10 % of basic salary if medical

treatment facility not entitled.

Dearness Allowance -- Totally taxable
Cost of living Allowance (COLA) –Totally Taxable
Conveyance Allowance.-- Totally Taxable

Compensatory Allowance – Exempt upto 75 % of gross salary

Income from Salary by NJ

INCOME FROM SALARY
CONVEYANCE FACILITY–

Use of Vehicle Amount to be included in Salary

Only for private use by the

employee 10 % of the cost of motor vehicle .

Partly for private use and partly for

official use 5 % of the cost of motor vehicle .

Income from Salary by NJ

 INCOME FROM SALARY
 Services of domestic servants
Amount of salary paid by the employer to the domestic
servants of an employee shall be included in the salary
income of that employee.
 Utilities to Employee

Fair Market value of utilities provided by employer xxx

Less : any amount paid by the employee for utilities xxx
Amount to be included in salary income of employee xxx

Income from Salary by NJ

INCOME FROM SALARY
 Loan to an employee
i. Interest free Loan -- Loan amount x Benchmark rate
(12 % for tax year 2010)
ii. Rate of Interest charged lower than Benchmark –
iii. Rate of Interest charged Higher than Benchmark –

Income from Salary by NJ

INCOME FROM SALARY
 Loan from Employer used for acquisition of an asset
i. Interest free loan or Markup up to benchmark rate.
ii. Interest at a rate higher than benchmark rate.
 Waiver of an amount payable by an employee
Amount shall be included in salary income of employee.
 Obligation of an employee paid by employer
Amount shall be included in salary income of employee.

Income from Salary by NJ

INCOME FROM SALARY
 Transfer of property or provision of services to employee
Fair Market value of the property etc xxx
Less : Payment made by the employee xxx
Amount to be included in salary income of employee xxx
 Any other perquisite
Fair Market value of the perquisite xxx
Less : Payment made by the employee xxx
Amount to be included in salary income of employee xxx

Income from Salary by NJ