WELCOME

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INCOME FROM SALARY

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Introduction
An income is treated as salary if the relationship between the payer and receiver is of master and servant

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Who is taxable ?
Employee - employer relationship. 2. Remuneration to directors. 3. Remuneration to partners. 4. Allotment to any MP or MLA.
1.

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What is included in salary ?

1. 2.

Basic salary - Fully taxable Allowance Allowance are fixed amount received on
monthly basis for a particular expense.

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3.

Perquisites
Money Facility = =

( Perquisites = personal + benefits )

perquisites are additional benefits in which the employer provides money or facility for PERSONAL EXPENCES Monitory perquisites Non monitory perquisites

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Following are the EXEMPTED remaining are FULLY TAXABLE Medical facility, Refreshment expenses, Scholarship for employees children, Car facility, Club facility, Gift from employee, Education facility for employee, Lunch expenses, Leave travelling expenses.

perquisites

and

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4.

Provident fund

Provident fund scheme provides for monthly contribution from the employees as well as the employer to a provident fund account.

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4.

Gratuity

Gratuity is a lump sum amount paid to an employee on the basis of the duration of his employment, on the termination of service due to retirement, resignation, death etc.

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Payment of gratuity act ,1972

A person working in any factory, mine, off field, plantation, port, railways, and a shop or establishment is covered under the payment of gratuity act ,1972. Any gratuity received by such person is exempt from tax, to the extent of the least of the following amounts(a)

Gratuity actually received:

(b) Rs. 3,50,000 , being the notified limit ; (c) Salary last drawn 15 days/26 days no. of completed years.

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5.

Pension

Pension is the monthly payment by the ex-employer to a retired employee which is taxed as salary. An employee may opt to get a one-time lump-sum payment in lieu of such monthly payments.

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6.

Leave salary
Leave salary means encashment of Unused Leave

if employee allow 40 days leave every year and if employee has taken only 10 days leave in a particular year than that unused leave of 30 days can be, (a). Encashed immediately, OR (b). Carried forward to subsequent years and encashes at the time of retirement.

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7. Voluntary Retirement Compensation

Benefit in lieu of salary payable to an employee opting for voluntary retirement is exempted from being charged to tax to the extent of Rs. 5 lakhs by reason of section 10(10C); even if the payment is stretched over a period of years, the same would not become chargeable to tax in any subsequent assessment year.

8. Retrenchment Compensation
Retrenchment means cancelation of contract of service by employer qnd any compensation received by the worker at the time of retrenchment is known as retrenchment compensation. It is exempt up to Rs. 5,00,000 [exempt U/S 10(10B)]

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9.Arrears

of salary / Advances salary / Bonus.

Arrears of salary

Arrears of salary received after settlement of disputes is fully TAXABLE. Advance salary - Advance salary is fully Taxable if this word advance is given without the word salary than it is a loan liability / not an income. Than it should be ignored.

Bonus it is taxable on Receipts Basis If bonus received than it is taxable and if bonus is not received than it should be ignore.

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Thank You.

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