Category: Income from Salary

Computation of Income under the head Income from Salary for the Assessement Year 2020-21 with new Amendment in Finance Bill 2020 has been described.

Deduction U/s 16 and Relief U/s 89 from Salary Income

1. Deduction from Salary Income (Section 16) The income chargeable under the head “Salaries” is computed after making the following deductions under Section 16 : Standard Deduction ; Entertainment Allowance Deduction ; and Professional Tax . (1). Standard Deduction [Sec. 16(i)/(ia)] – Standard deduction is Rs. 50,000 ( Rs. 40,000 […]

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Taxability of Retirement Benefits [Gratuity, Pension, Leave Encashment, NPS]

1. Exemption of Death-Cum-Retirement Gratuity [Section 10(10)] Gratuity is a payment made by the employer to an employee in appreciation of the past services rendered by the employee. Gratuity can either be received by: the employee himself at the time of his retirement; or the legal heir on the event […]

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Valuation of Perquisites for computing Salary income

Perquisite may be defined as any casual emolument or benefit attached to an office or position in addition to salary or wages. It also denotes something that benefits a man by going into his own pocket. Perquisites may be provided in cash or in kind. However, perquisites are taxable or […]

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Perquisites – Tax treatment for Computing Salary Income

1. Definition and Types of ‘Perquisites’ as per [Section 17(2)] (A). Definitions and Meaning of Perquisites Perquisite may be defined as any casual emolument or benefit attached to an office or position in addition to salary or wages. It also denotes something that benefits a man by going into his […]

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Allowances – Tax treatment for Computing Salary Income

Allowance is a fixed monetary amount paid by the employer to the employee for meeting some particular expenses, whether personal or for the performance of his duties. These allowances are generally taxable and are to be included in the gross salary unless a specific exemption has been provided in respect […]

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Tax Treatment of Provident Funds (PF) for Salary Income

1. Provident Funds (PF) To encourage savings for the social security of employees, the Government has set up various kinds of provident funds. The employee contributes a fixed percentage of his salary towards these funds and in many cases employer also contributes. The whole contribution along with interest is credited […]

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Income under the head Salary -Definition and Meaning

1. Computation of ” Salary ” Income [Section 15-17] Salary income of an employee is to be computed in accordance with the provisions laid down in sections 15, 16 and 17. Section 15, as discussed earlier gives the scope of this head and tells us that which incomes shall form part of […]

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