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:
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
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.
of Income Tax Act "Deductions from salaries"
The income chargeable under the head "Salaries" shall be
computed after making the following deductions, namely :-
(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