Page 175 - DCOM301_INCOME_TAX_LAWS_I

Income Tax Laws – I

Notes Self Assessment

Fill in the blanks:
1. ……………………..is the remuneration received by or accruing to an individual,
periodically, for service rendered as a result of an express or implied contract.

2. The salary received by a partner from his partnership firm carrying on a business is not
chargeable as…………………..
3. …………………..is confined to the earnings of labourers.

4. ………………………is annual grant made by the employer to the employee.

7.2 Basis of Charge of Salary

As per Section 15, the income chargeable to income tax under the head salaries would include:
1. Any salary due to an employee from an employer or a former employer during the
previous year irrespective of the fact whether it is paid or not.
2. Any salary paid or allowed to the employee during the previous year by or on behalf of
an employer, or former employer, would be taxable under this head even though such
amounts are not due to him during the accounting year.
3. Arrears of salary paid or allowed to the employee during the previous year by or on
behalf of an employer or a former employer would be chargeable to tax during the
previous year in cases where such arrears were not charged to tax in any earlier year.

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Caution However it would not include:
1. Any salary paid in advance and included in the total income of any person for any
previous year, shall not be included again in the total income of the person when the
salary becomes due.
2. Any salary, bonus, commission or remuneration, by whatever name called, due to,
or received by, a partner of a firm from the firm shall not be regarded as “salary” for
the purposes of this section.
Section 17 of the Act gives an inclusive definition of salary. Broadly, it includes:
1. Basic salary
2. Fees, Commission and Bonus
3. Taxable value of cash allowances

4. Taxable value of perquisites
5. Retirement Benefits
Although, all the components of salary income are included in salary, there are certain incomes
in each of these categories, which are either fully exempt or exempt upto a certain limit. The
aggregate of the above incomes, after the exemption(s) available, if any, is known as ‘Gross
Salary’. From the ‘Gross Salary’, the following three deductions are allowed under Section 16 of
the Act to arrive at the figure of Net Salary:

1. Standard deduction - Section 16 (i)

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