Direct & Indirect Taxes, Tax Ready Reckoner, Tax Management, Tax Act. & Rules, Tax Planning & Tax Savings.

Direct & Indirect Taxes, Tax Ready Reckoner, Tax Management, Tax Act. & Rules, Tax Planning & Tax Savings.

Salaries Income

Income under the Head “Salaries” [Sections 15 to 17]

Income under the head “Salaries” under Income Tax Act.

As per section 15, 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 in that  previous year or not; (B)          any salary paid or allowed  to him in the previous …

Income under the head “Salaries” under Income Tax Act. Read More »

Tax Treatment of ‘Retirement Benefits’ Income to be included in Gross Salary – for computing ‘Salaries’ Income

Retirement Benefits Incomes includes …. Gratuity Pension Leave Encashment Retrenchment Compensation Compensation received on Voluntary Retirement 1.   Treatment of ‘Gratuity’ – for computing Salary Income. Gratuity is a payment made by the employer to an employee in appreciation of the past services  rendered by the employee. Gratuity can either be received by: (a)           the …

Tax Treatment of ‘Retirement Benefits’ Income to be included in Gross Salary – for computing ‘Salaries’ Income Read More »

Tax Treatment of ‘Allowances’ Income to be included in Gross Salary- for computing Salary Income

Allowance is a fixed monetary amount paid by the employer to the employee for meeting some  particular expenses, whether personal or for the performance of his duties. These allowances are  generally taxable and are to be included in the gross salary unless a specific exemption has been  provided in respect of any such allowance. Specific …

Tax Treatment of ‘Allowances’ Income to be included in Gross Salary- for computing Salary Income Read More »

‘Perquisites’ as per Section 17(2) of the Income Tax Act, 1961. – for computing Salary Income

Section 17(2) of the Income-tax Act, 1961 gives an inclusive definition of ‘perquisite’. As per this  section ‘perquisite’ includes: (i)            the value of rent-free accommodation provided to the assessee by his employer; (ii)           the value of any concession in the matter of rent respecting any accommodation provided to  the assessee by his employer; …

‘Perquisites’ as per Section 17(2) of the Income Tax Act, 1961. – for computing Salary Income Read More »

Valuation of Perquisites on Rent Free Accommodation or Accommodation provided at Concessional Rate under Income Tax Act – for computing Salary Income

Accommodation provided to the employee may be— (i) unfurnished (ii) furnished Further, such accommodation may be provided: (a) rent free; or (b) at concessional rate. As per amended rule 3(1), the valuation of accommodation should be done as under: 1.   Accommodation provided by the Government to its employees Where the accommodation is provided by Central …

Valuation of Perquisites on Rent Free Accommodation or Accommodation provided at Concessional Rate under Income Tax Act – for computing Salary Income Read More »

Perquisites of Specified Fringe Benefits or Amenities in the hands of all Employees for computing Salary Income under Income Tax Act.

The rules for valuation of specified fringe benefits or amenities are as under: 1.   [Rule 3(7)(i)]- Interest Free or Concessional Loans  – Its Valuation for computing Salary income The value of the benefit resulting from loans made available to the employee or any member of  his household during the relevant previous year by the employer …

Perquisites of Specified Fringe Benefits or Amenities in the hands of all Employees for computing Salary Income under Income Tax Act. Read More »

Valuation of Motor Car / Other Vehicles, provided by the Employer, is a Perquisite for Computing Salary Income only for Specified Employees

As already discussed, motor car/other vehicles, provided by the employer, is a perquisite only for  specified employees because it is a facility provided by the employer to the employees. Who is a Specified Employee [Section 17(2)(iii)]: An employee shall be a specified  employee, if he falls under any of the following three categories:  (i)            …

Valuation of Motor Car / Other Vehicles, provided by the Employer, is a Perquisite for Computing Salary Income only for Specified Employees Read More »

Tax Treatment of Perquisites Taxable in the hands of Specified Employees – for computing Salary Income

1.   [Rule 3(3)]- Valuation of Provisions by the employer of Services of a Sweeper, a Gardener, a Watchman or Personal Attendant   – for computing Salary income The value shall be the actual cost to the employer i.e. the total amount of salary paid or payable by  the employer or any other person on his behalf …

Tax Treatment of Perquisites Taxable in the hands of Specified Employees – for computing Salary Income Read More »

[Section 17(2)]- Tax Treatment of Medical Facilities provided to an Employee – for Computing Salary Income

In the following cases, medical facility is not a perquisite and thus not taxable in the hands of the  employees. 1.   Medical facility in a hospital, etc. maintained by the employer: The value of medical treatment provided to an employee or to any member of his family in any  hospital, dispensary or a clinic or …

[Section 17(2)]- Tax Treatment of Medical Facilities provided to an Employee – for Computing Salary Income Read More »

[Section 10(5)]- Tax Treatment of Leave Travel Concession or Assistance (LTC/LTA) – for Computing Salary Income

The employee is entitled to exemption under section 10(5) in respect of the value of travel  concession or assistance received by or due to him from his employer or former employer for himself  and his family, in connection with his proceeding— (a)           on leave to any place in India. (b)          to any place …

[Section 10(5)]- Tax Treatment of Leave Travel Concession or Assistance (LTC/LTA) – for Computing Salary Income Read More »