- Salary is taxed on due basis or receipt basis, whichever is earlier. Therefore if any advance salary is received which is related to forth coming periods, then it is chargeable to tax in the year of receipt.
- Arrears of salary are taxable in the year of receipt, if not charged to tax in any earlier previous year.
- Salary includes:
(i) wages
(ii) any annuity or pension
(iii) any gratuity
(iv) any fees, commissions, perquisites or profits in lieu of or in addition to any salary or wages
(v) any advance of salary
(vi) any payment received by an employee in respect of any period of leave not availed of by him
(vii) the annual accretion to the balance at the credit of an employee participating in a recognised provident fund, to the extent to which it is chargeable to tax under rule 6 of Part A of the Fourth Schedule
(viiI) the aggregate of all sums that are comprised in the transferred balance as referred to in sub-rule (2) of rule 11 of Part A of the Fourth Schedule of an employee participating in a recognised provident fund, to the extent to which it is chargeable to tax under sub-rule (4) thereof
(ix) the contribution made by the Central Government [or any other employer] in the previous year, to the account of an employee under a pension scheme referred to in section 80CCD
(x) commission on a fixed percentage of sales
(xi) profit in lieu of salary.
(xii) perquisites.
- rent free accommodation
- accommodation provided at concessional rates.
- payment made by employer directly on behalf of employee’s
- premium paid for life insurance of employee whether directly or through a fund other than RPF or an approved Superannuation Fund or a Deposit-linked Insurance Fund.
- sweat equity share/ESOP allotted free of cost or at concessional rate to employee
- contribution to approved Superannuation Fund exceeding one lakh rupees.
- medical treatment of the employee or any of his family member
- perquisites taxable in hands of specified employee