Section 15: Incomes Chargeable to Income-Tax Under the Head “Salaries”

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

1. 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 year, whether paid or not.
• Any salary paid or allowedin the previous year, even if not due or if it relates to an earlier year.
• Any arrears of salary paidin the previous year if not charged to tax earlier.

2. Special Cases [Section 15(2)]

• Taxability of salary from multiple employers: If an individual receives salary from more than one employer, the aggregate salary is taxable.
• Salary from foreign employers: Taxable if services are rendered in India.

When Does Salary Income Become Taxable?

✔ Due Basis – Salary becomes taxable when it is due, even if not received.

✔ Receipt Basis – Salary received in advance is taxable in the year of receipt.

✔ Arrears – If salary for past years is received in the current year, it is taxable now.

Example of Taxability Under Section 15

Scenario:

• An employee’s salary for March 2024 (₹50,000)is credited in April 2024.
• The employer also pays ₹20,000 as an advance for April 2024in March 2024.

Tax Treatment:

• ₹50,000 (March salary)→ Taxable in FY 2023-24 (since it was due).
• ₹20,000 (Advance for April)→ Taxable in FY 2023-24 (since received).