We all know what a salary is, but do you know what a salary is according to the Income Tax Department? It's crucial to understand the concept of salary because, in some situations, the money you think of as salary may not be deemed salary income by the Income Tax Department. The revenue or remuneration earned by an individual for services rendered or a contract undertaken is referred to as salary income. This phrase effectively sums up the remuneration a person receives for services rendered under a contract of employment. Only if there is an Employer and Employee relationship between the person making the payment and the person receiving the payment will this amount of remuneration be considered income for the purposes of the Income Tax Act. Employer-Employee Relationship Any payment received by a person shall be considered as income under the Income Tax Act if the payer and payee have an employer-employee relationship. Their relationship should be that of a master and servant for the purpose of classifying income as salary income. The salary for the purpose of calculation of income from salary includes: Wages, Pension, Annuity, Gratuity, Advance Salary paid, Fees, Commission, Perquisites, Profits in lieu of or in addition to Salary or Wages, Annual accretion to the balance of Recognized Provident Fund, Leave Encashment, Transferred balance in Recognized Provident Fund, Contribution by Central Govt. or any other employer to Employees Pension A/c as referred in Sec. 80CCD.

Saranya R Kurup

168 resources

1

3

2

Like