- The document discusses various types of income that are taxed as salary under the Income Tax Act, including regular salary, bonuses, commissions, pensions, gratuity, and leave encashment. - It provides details on what is considered salary and the tax treatment of items like leave encashment, gratuity, and pensions for government employees versus non-government employees. - Examples are given to illustrate how to calculate the taxable and non-taxable portions of retirement benefits like gratuity and leave encashment received by employees.

1. Income from Salary By Prof. Augustin Amaladas and Prof.Amala shanthi St. Joseph’s College of Commerce and Jyoti Nivas college respectively, Bangalore M.Com., AICWA.,PGDFM., B.Ed. 09845844319 [email_address] What do you mean by rest? Casually sit back and relax and enjoy your Income tax It is so simplified in such a way that you can easily understand Players!! Now you Do some Exercise Even not Studied So far. This slides are Prepared for Any one who Had not Attended classes regularly Or do not have Time or money. Education for all B. Com, BBM, M.Com, ICWA CA CS M B As

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3. salary Basic + DA+ Commission etc Normal components Allowances Perquisites Taxable To employee Fringe Benefit tax Taxable To Employer Applicable To companies

22. 1.Leave encashment 1.Received while in Service Fully taxable(government or Non government employee) Received At the time of retirement Government Employees-Exempted Central/ State govt. Employees(2) Non government employee (including local authority and corporation employees) (see next slide)

34. Gratuity Non Government employee under not covered under the payment of gratuity Act. Including statutory corporation Average Salary: Basic +DA comes for retirement +Fixed % of commission on sales No of days in a month- 30 days only Received while in service is fully taxable Received Gratuity at the time of retirement: Least of the following is exempted(next page) Non Government employee under the payment of gratuity Act. Including statutory corporation Average salary: last drawn includes Basic+DA No of days in a month- 26 days only Received while in service is fully taxable Received Gratuity at the time of retirement: Least of the following is exempted  see in the next page. 1.Government Employee( Central,State and local authority employees )(three) 2.Average salary: Not necessary 3.No of days in a month-Not necessary 4..Received while in service is fully taxable 5.Received Gratuity at the time of retirement Exempted

35. The least of the following is exempted from gratuity received: 1 .(15/30) x (10 preceding months average salary) x (number of fully completed years of service) Basic + % DA comes for retirement + Fixed Percentage of commission on sales 2. Rs.3,50,000 3. Gratuity actually received Note: Fraction of the year is not considered The Least of the following is exempted from gratuity received: 1 .(15/26) x (last salary drawn )x (number of years of service ) ie.Basic+DA (No commission please) Year= above 6 months is considered as one year. 2.Rs.3,50,000 3.Gratuity actually received Note: If he worked more than one company collectively more than 6 months equal to one year Non Government employee under not covered under the payment of gratuity Act. Including statutory corporation Non Government employee under the payment of gratuity Act. Including statutory corporation

38. Not required as there is no employer employee relationship after the death of Mr.X.The gratuity received is taxable under the head income under other sources. Least of the following is exempted: 1.(15/30) x32 x31,760=Rs.5,08,160 2.Rs. 3,50,000 3.Gratuity actually received=Rs. 3,40,000 Least : Rs. 3,40,000 Therefore Gratuity received is fully exempted. Fraction of the year is ignored. Therefore 32 years Average salary 10 months preceding the month of retirement=Basic+DA which comes for retirement +fixed % of commission= January to October salary= Jan to March Rs.17,000 each and 19000 from April to October=Rs.1,84,000+ Rs.7360 x10(DA)+6000 x 10(Commission) Average salary=3,17,600/10 =Rs.31760 1.Year of service 2.Meaning of salary Wife receives after the death of Mr.X XYZ Public limited government company not covered under the payment of gratuity Act Particulars

54. Provident fund Salary means Basic+DA+Fixed % of Commission on Sales Personal savings in post office by self employed etc. By Employee(not by employer Since employer does not contribute nothing is taxable Not recognised by commissioner of Income-tax act Employer contributes but there is no separate account in the name of employee Only when employer transfers his account to employee’s account is taxable or converted to recognised PF excess over 12% of salary and excess over 9.5% towards interest is taxable Private establishments having 20 or more employees Both employer and similar contribution by employees Employer’s contribution exceeding 12% of salary and Interest exceeding 9.5% taxable. Government and semi-government Both employer and similar contribution by employees Employer’s contribution is exempted. 1.Who maintains? 2.Who contributes? 3.Exempted or not? Employees contribution comes under Section 80C as savings in all cases Public PF Un-recognised PF Recognised PF Statutory PF Particulars

66. Not directly relate to Official duty (General) They are fixed. Whether spent Or not.Excess Taxable as they Are not given For official Duty Rs. 800 per month. If handicapped person Rs.1600 per month is exempted. Depends on altitude/Place 3. Traveling allowance to commute from home to office 4. Other border area allowances &70% of allowance Or Rs. 6000 per month whichever is lower exempted Rs.100 per month per child max.two children.If in hostel Rs.300 extra per child for two children 1.Allowance for transport employees 2.Children education allowance

67. Exercise Amount spent or not, exemptions are given (200 x2 x12+300 x12=8400 (100 x2 x12 +400 x12)=7200 12000-9600=2400 72000-50,400=21600 1,20,000-72000=48000 100 x2 x12=2400 300 x2 x12=7,200(limited to two children 800 x12=9600 70%(72000) or 6000 per month which ever is lower=50,400 6000 x 12=72000 or 70%(1,20000)=84000 Whichever is lower 300 PM per child 400 per child per month 12000 72000 1,20,000 Three Three ------- Y X 1.Educational allowance 2.Hostel expenditure 3. Transport allowance from house to office or vice-versa 4.Transport company employee –daily allowance 5. -DO- Chargeable to tax Exempted from tax Amount received from employer No. of Children/Name Particulars

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74. By giving you receive including knowledge This is the base of double entry book keeping

77. 1.Allowed by Employer to Employee 4.Personal advantage To the employee 5. Derived by Virtue of Employer’s authority 3.Directly Depend upon service 2.Allowed during Continuance Of employment Conditions To become perquisites

79. 1.Rent free Accommodation Provided By employer 4.Personal Obligations of Employee Met by employer 5. Funds paid By employer Other than RPF/Insurance fund 3.value of Benefits provided Like furniture In the accommodation 2.concessional Accommodation Provided By employer Perquisites Includes 6.Fringe Benefits Allowed To employees Of Other Than companies Accommodation Related(1-3) Including sweeper,gardener,watchman,gas, electricity,

120. Motor car- Owned /Hired by employer but maintained by employee Expenditure Incurred by employer or Hire charges + 10% on original Cost of car incurred by employer Used wholly for personal purpose Note:- if recovered by employer it is deductible

124. Perquisites-car Re imbursed by employer Owned by employee