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INCOME TAX LAWS & ACCOUNTS
[INCOME FROM SALARY]
1. Gautam Chopra
2. Saurabh Chopra
3. Chaman Tanwar
4. Kanak Binayakiya
5. Pradhumn Soni
FLOW OF PRESENTATION
• Grading System of Basis of Salary
• Basis of Charge of Salary
• Format of Computation of Salary
• Basic Introduction
• Retirement Benefits
INTRODUCTION TO SALARY
• Normally, the term ‘Salary’ signifies the consideration for services rendered
by a person and it is a fixed monthly remuneration.
• To cover an income covered under salary head “Employer & Employee”
relationship has to be established.
• Forgoing of Salary to be treated as application for salary.
GRADING SYSTEM OF BASIS OF SALARY
• Certain employees are entitled to a graded system of basic
• The normal annual increments are already fixed in the grade.
• Here is an Example
BASIS OF CHARGE OF SALARY
• It is charged either on “due” or “receipt” basis, whichever is earlier.
• Special Case: In increment like Pay Commission by the Govt. and revision of salaries of
employees. Certain relief shall also be granted in such cases.
• Place of Accrual: Salary earned in India is deemed to accrue or arise in India and will be
taxed in India, even if
- It is received outside India.
- It is received after termination of service.
• Pension received abroad in respect of services rendered in India, shall be treated as Income
arised in India.
FORMAT OF COMPUTATION OF SALARY
Income from salary -
Income from allowances -
Taxable value of perquisites -
Gross Salary -
Less Deductions u/s 16 -
Entertainment Allowance -
Professional Tax -
Income from Salaries -
Actual or limit
Free food and
Value of gifts
If owned by
If owner by
• A bonus is any financial compensation, reward, or return over and above the
normal expectations of the recipient. A bonus can be given to a company’s
employees and executives, prospective employees, or shareholders.
Retirement Benefits –
• It is generally paid at the time of cessation of employment.
• It is based upon the duration of service.
Pension (Sec 10(10A)
• Pension is a payment made by the
after the retirement/death of the
a reward for his past services.
• Uncommuted Pension
• Commuted Pension
Uncommuted pension which is
monthly pension received by
employee after retirement.
Commuted Pension which is
lump sum payment received at
the time of retirement.
DEDUCTIONS U/S 16
• Entertainment Allowances
• Professional Tax