"SALARIES" UNDER HEAD CS EXECUTIVE TAX LAWS

Profits UNDER HEAD "SALARIES" CS EXECUTIVE TAX LAWS

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.

 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 received by him are therefore 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:

•  Salaries
•  The annuity or retirement
•  Gratuities
•  Fees, Commission, any properties or gains in lieu of salary in any name whatsoever
•  The Wage Advance
•  Any sum shifted to a recognized provident fund from an unrecognized provident fund
•  Contribution of the employer to the employee's Recognized Provident Fund in excess of the defined amount specified in the provisions in force
•  Abandon Encashment
• Compensation paid to the worker as a result of changes in the contract for the operation, etc.
• Contribution to the employee's account by the Central Government or any other employer under the notified pension scheme referred to in section 80 of the CCD.

BASIS OF CHARGE OF INCOME SALARY – SECTION 15

 Section 15 of the charging section states that the salary is taxable on a "due" or "paid" basis, whichever is earlier. That is, if it is due, it is included in the taxable salary, irrespective of whether it is paid or not, and if it is paid, it is taxable, whether it is due or not. It is therefore only logical to note that if it has already been taxed on a due basis, the same cannot be taxed again when it is paid. Similarly, if a salary paid in advance has already been taxed in the year of payment, it cannot be taxed subsequently when it becomes due.

It should be noted that – it is worth mentioning that the salary is payable on a "due" or "receipt" basis (whichever matures earlier) regardless of whether the books of accounts are kept on a mercantile or cash basis by the assessee. The method of accounting cannot vary from the basis of the charge fixed.

 To make it clearer, Advance salary is taxable; however, Advance against salary is essentially a loan that will be recovered from the Employee at a later date and is therefore not taxable.

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