What is Salaries? What are Deductions from salaries? Section 15 and 16 of Income Tax Act 1961

Salaries and Deductions from salaries are defined under section 15 and 16 of Income Tax Act 1961. Provision under these sections are:

Section 15 of Income Tax Act "Salaries"

The following income shall be chargeable to income-tax under the head "Salaries"-

(a) any salary due from an employer or a former employer to an assessee in the previous year, whether paid or not;
(b) any salary paid or allowed to him in the previous year by or on behalf of an employer or a former employer though not due or before it became due to him;

(c) any arrears of salary paid or allowed to him in the previous year by or on behalf of an employer or a former employer, if not charged to income-tax for any earlier previous year.

Explanation 1.-For the removal of doubts, it is hereby declared that where any salary paid in advance is included in the total income of any person for any previous year it shall not be included again in the total income of the person when the salary becomes due.
Explanation 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 16 of Income Tax Act "Deductions from salaries"

16. The income chargeable under the head "Salaries" shall be computed after making the following deductions, namely :-
(i) [***]
(ii) a deduction in respect of any allowance in the nature of an entertainment allowance specifically granted by an employer to the assessee who is in receipt of a salary from the Government, a sum equal to one-fifth of his salary (exclusive of any allowance, benefit or other perquisite) or five thousand rupees, whichever is less;

(iii) a deduction of any sum paid by the assessee on account of a tax on employment within the meaning of clause (2) of article 276 of the Constitution, leviable by or under any law.

(iv) [***]
(v) [***]

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