The first head under the Income Tax is income under the "Salaries" head. Salaries is the one that has various components and associated computations in calculating the taxable income under the head relative to the other head in the Income Tax. Let's delve into knowing the definition of wages, what salary, salary allowances, retirement benefits, leave cash and salary criteria entail.
MEANING OF SALARY
Salary is the remuneration that a person receives or accrues for service rendered by an express or implied contract, and where such remuneration is periodic. The presence of an employer-employee relationship is the most basic aspect under the heading "salaries" for taxing a specific receipt.
Salary is the remuneration that a person receives or accrues for service rendered by an express or implied contract, and where such remuneration is periodic. The presence of an employer-employee relationship is the most basic aspect under the heading "salaries" for taxing a specific receipt.
The remuneration earned by a person, in any form whatsoever, is regarded as a salary only if the relationship between the payer and the payee is between the employer and the employee or the master and servant. As far as the existence of the persons covered by the head salary is concerned, the employer may be an entity, a company, an association of persons, a company, a corporation, a central government, a government agency, a public body, or a local authority, etc., probably operating in or outside India. As far as the worker is concerned, he is a person who can be a full-time worker or a part-time worker.
A Member of Parliament or of the State Legislature shall not, however, be regarded as a government employee. Salaries and allowances earned by him are also not taxable under the heading 'Salaries,' but are taxable under the heading 'Income from other sources,' in accordance with section 56.
WHAT DOES “SALARY” INCLUDE?
"Salary" includes, as per Section 17(1) of the Income Tax Act:
- Wages
- Annuity or pension
- Gratuity
- Fees, Commission, any perquisites or profits in lieu of salary in whatsoever name
- Advance of Salary
- Any amount transferred from an unrecognized provident fund to a recognized provident fund
- Contribution of the employer to a Recognized Provident Fund of the employee in excess of the prescribed limit specified under the applicable provisions
- Leave Encashment
- Compensation paid to the employee as a result of variation in Service contract etc.
- The contribution made by the Central Government or any other employer to the account of an employee under a notified pension scheme referred to in section 80 CC.
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