Tag: Income under the head Salary

Tax on Income from Salary

Definition of Salary:  If the following amount received by an employee from his employer the amount so received is defined as Salary: includes the following amounts received by an employee from his employer, during the previous year Wages; any annuity or pension; (Family pension received by heirs of an employee is taxable under income from


Particulars Statutory Recognized Unrecognized Public Constitued inder Provident Funds Act,1952 EPF and Misc,Provident Act, 1952 & recognized by the Commissioner of PF and CIT Not recognized by the Commissioner of Income Tax Public Provident Fund Act,1968 Account in SBI or Post Offices Contribution by Employer and Employee Employer and Employee Employer and Employee All assessees

Allowances fully taxable without any exemptions

1. Basic Salary  9. Fees 2. Dearness Allowance 10. Lunch/Tiffin Allowance 3. Advance Salary 11. Overtime Allowance 4. Arrears of Salary 12. Servant Allowance 5. City Compensatory Allowance 13. Warden Allowance 6. Bonus 14. Non-practicing Allowance 7. Commission as a percentage on turnover 15. Family Allowance 8. Fixed Medical Allowance 16. Leave encashment during service

Professional Tax

(i) Professional tax or tax on employment paid by an employee, levied under a State Act shall be allowed as deduction (ii) such deduction is available only on actual payment (iii) If an employer pays professional tax on behalf of his employee, then it will first be included in the Salary as a perquisite and

Entertainment Allowance

Applicable only for Government Employees [Sec.16(ii)] Least of the following will be allowed as a deduction: (i) Actual amount of entertainment allowance received (ii) 20% of Basic salary of the Individual (iii) 5,000  


Conditions for claiming exemption: (i) An individual, who has retired under the Voluntary Retirement scheme, should not be employed in another company of the same management. (ii) He should not have received any other Voluntary Retirement Compensation before from any other employer and claimed exemption. (iii) Exemption u/s 10(10C) in respect of Compensation under VRS


Compensation is received by a workman at the time of: (i) closing down of the undertaking. (ii) transfer (irrespective of by agreement/compulsory acquisition) if the following conditions are satisfied: • service of workmen interrupted by transfer • terms and conditions of employment after transfer are less favourable • new employer is not under a legal

Taxability of uncommuted pension and commuted pension

1. Taxability of Uncommuted Pension or Monthly Pension: (a) Pension is received periodically by the retired employee (b) It may be received by Government or non-government employees (c) Amount received shall be fully taxable under the head salaries 2. Taxability of Commuted Pension: (a) Pension is received in lumpsum as per the terms of the

Gratuity as per Income Tax Act

Gratuity payment is a lump sum amount that an employer will pay to the employee as an recognition of your devotion to the company. Now the question arises, When I will get my Gratuity? Gratuity payment is available only after you have completed at least 5 years with the organisation. If an employee dies during