Basis of Charge - Section 15 - Income Tax - Ready Reckoner - Income Tax

INCOME FROM SALARIES CONDITION FOR CHARGING INCOME UNDER HEAD SALARIES There must be Employer and Employee relationship between the person liable to pay the amount and person entitled to receive the amount. BASIS OF CHARGE ( Section 15 ) The following income shall be chargeable to income tax under the head Salaries Any Salary due in the PY or any Salary paid in the PY = whichever is earlier, whether paid or not Any arrears of salary paid in the PY, if not charged to tax for any earlier PY on due basis. Salary received in advance is taxable on receipt basis and not on due basis. Explanation: If advance salary is taxed during PY of receipt then it shall not be taxed again when it becomes due. Any salary, bonus, commission or remuneration due to or received by a partner of a firm shall not be regarded as salary u/s 17(1) but be taxable as PGBP income. Section 17(1) SALARY includes: (i) Wages (ii) Any Gratuity During the employment At the time of retirement / death etc. (iii) Any Annuity or Pension At the time of retirement / death etc. (iv) Leave Encashment During the employment At the time of retirement / death etc. (v) Profits in lieu of or in addition to any salary or wages any compensation on account of Retrenchment on account of VRS / VSS in any other case any payment from a Provident fund or other fund any sum received under a Key Man insurance policy any amount received before joining / after cessation of employment any other sum due / received from the employer or former employer i.e Allowances Special Allowances House rent Allowance Entertainment Allowance Other Allowances Bonus / Overtime Others (vi) Any Commissions (vii) Any Fees (viii) Any advance of salary (ix) Employer s contribution towards RPF in excess of 12% of salary (x) Interest earned on RPF in excess of 9.5% p.a. (xi) Transferred balance from UPF account to a RPF account, to the extent it is taxable. (xii) Contribution made by the employer to the account of an employee under a Pension Scheme in section 80CCD ( i.e. NPS) Perquisites GROSS SALARY Less : Deduction u/s 16(ia) - Standard deduction of Rs. 50,000 Deduction u/s 16(ii) Entertainment Allowance Deduction u/s 16(iii) Professional Tax TAXABLE SALARY