SALARY :-
It is the first source which is given in the heads of
income. It is chargeable to tax. The term “Salary” is used in the wider sense.
It includes the following receipts :
1.
Salary and wages.
2.
Profits in lieu of or in addition to salary or
wages.
3.
Fees commission or allowance.
4.
Annuity, pension or gratuity.
5.
Prerequisites.
ESSENTIALS OF SALARY INCOME :-
Following are the important features of salary income :
1.
Existence Of Relationship :-
It is necessary that the relationship between employer and
employee must exist. The amount must be paid by the employer to the employee.
The employer may be present or past, there is no difference under this head the
income can not be taxed without this relationship.
2.
Earned Salary :-
Whether received or not salary earned is taxable.
3.
Income Paid In Own Country :-
Income paid by foreign government is not taxable under the
salary head. Income paid by the government or the company or by any employer in
own country is considered salary.
4.
Salary Of Service :-
Amount received without any service will be not considered
salary. It is necessary that salary or reward must be for some past, present or
future services.
5.
Employee :-
In case of company managing director, directors and agent of
a company is also included in employees.
6.
Pension :-
It is also included in the salary head. Because it is the
income which is due to employee for his past services.
7.
Salary Received Is Taxable Whether Earned or Not
:-
(a) Minimum time scale
It means the amount from where the salary scale of the
employee starts.
(b) Basic salary
It means the pay and allowances payable monthly but
following does not include :
·
Dearness allowance
·
Contribution of employer in provident fund
·
Interest on provident fund
·
Medical, conveyance and special allowance
·
Utilities and entertainment allowance
ACCOMMODATION :-
House Rent Allowance : Amount received by a salaried person
as a house rent allowance is exempted
from tax up to 45% of the basic salary or minimum time scale. ON the
other hand if an assessee has been provided an accommodation the allowance
shall be made according the rules.
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