Section 10(32) of the Income Tax Act provides a modest exemption when a minor child’s income is clubbed with that of a parent under Section 64(1A). When It Applies: If a minor child earns income (e.g., interest, rent, dividends) and it is clubbed with the income of the parent (typically the one with higher income), […]
Section 10(34A) of the Income Tax Act provides a tax exemption for shareholders on income received from a buy-back of shares by a domestic company, but only under specific conditions. What’s Exempt: Any income arising to a shareholder from a buy-back of shares by a domestic company is exempt in the hands of the shareholder,
Section 10(37) of the Income Tax Act provides a capital gains exemption for individuals or Hindu Undivided Families (HUFs) on the compulsory acquisition of urban agricultural land. Key Conditions for Exemption: Eligible Person: Only individuals or HUFs can claim this exemption. Nature of Land: The land must be urban agricultural land—i.e., land within or near
Section 10(37)-Capital Gain Exemption on Transfer of Agricultural Land Read More »
Income from salaries is taxable under Sections 15-17 of the Income Tax Act, 1961. It includes all remuneration received by an employee from an employer in cash or kind, along with certain allowances and perquisites. Below is a structured guide on how to compute taxable salary income. 1. Components of Salary Income [Section 17(1)] Salary includes: ✔ Basic
Computation of Income under the head Income from “Salaries” Read More »
Section 15 of the Income Tax Act, 1961 defines what constitutes taxable salary income and specifies the conditions under which such income becomes chargeable to tax. Key Provisions of Section 15 Incomes Taxable as Salary [Section 15(1)] The following incomes are chargeable under the head “Salaries”: Any salary duefrom an employer (current or former) in the previous
Section 15: Incomes Chargeable to Income-Tax Under the Head “Salaries” Read More »
Arrears of salary refer to payments received by an employee for work done in previous financial years but paid in the current year. These payments can significantly increase taxable income, potentially pushing the taxpayer into a higher tax bracket. The Income Tax Act, 1961, provides relief under Section 89(1) to mitigate this additional tax burden. What is
Arrear of Salary: Taxation and Relief Under Section 89(1) Read More »
Section 17(3) defines “profits in lieu of salary” as payments received by an employee in connection with termination of employment or as compensation for any modification in employment terms. These amounts are taxable under the head “Salaries” even if they don’t strictly qualify as salary. Key Components of Profits in Lieu of Salary Termination Payments
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Allowances form a significant part of salary income and are classified into three categories for tax purposes: Fully Taxable, Partially Exempt, and Fully Exempt. Below is a detailed breakdown: 1. Fully Taxable Allowances These allowances are fully added to taxable income: Dearness Allowance (DA) City Compensatory Allowance Overtime Allowance Fixed Medical Allowance Servant/Driver Allowance Non-Practicing Allowance (for doctors) Project
Allowances Under the Head “Salaries” Read More »
HRA (House Rent Allowance) is a salary component that helps employees cover rental expenses. Under Section 10(13A) of the Income Tax Act, 1961, and Rule 2A, a portion of HRA is exempt from tax if certain conditions are met. 1. Eligibility for HRA Exemption Only for salaried employees(not self-employed) . Must live in rented accommodation(not self-owned) . HRA must be part
House Rent Allowance (HRA) – Section 10(13A) & Rule 2A Read More »
Section 10(14) provides exemptions for certain special allowances granted to employees for specific purposes. These allowances are partially or fully exempt from tax, subject to prescribed limits and conditions. 1. Fully Exempt Allowances (No Limit) These allowances are 100% tax-free: Compensatory Field Area Allowance(Armed Forces) High Altitude Allowance(Defense personnel) Island Duty Allowance(Armed Forces in Lakshadweep/Andaman) UN Mission Allowance(For
Prescribed Allowances Exempt Under Section 10(14) Read More »
