If you are a salary earner, your salary income to be taxed will be calculated in a different way from gains.

Salary includes the pay, allowances, bonus or commission payable monthly or otherwise or any monetary payment, in whatever name called from one or more employers.

Therefore "salary" includes basic salary, encashment of leave salary, advance of salary, arrears of salary, various allowances such as dearness allowance, entertainment allowance, house rent allowance, conveyance allowance and also includes perquisites by way of free housing, free car, free schooling for children of employees, etc

Salary is taxable in the year of receipt or in the year of earning of the salary income, whichever is earlier. i.e. if the salary has been received first, then it will be taxable in the year of receipt. If it has been earned first but not yet received then it will be taxable in the year of earning. Salary income is taxable in the hands of individuals only. No other type of person such as a firm or HUF, companies can earn salary income.

Salary Heads

• Salary (including advance salary)

• Wages

• Fees

• Commissions

• Pensions

• Annuity

• Perquisite

• Gratuity

• Annual Bonus

• Income From Provident Fund

• Leave Encashment

• Allowance

• Awards
   

Income Tax Allowances

• Transport

• House Rent

• Entertainment

• Children Education

• Medical

• Special

• Tribal Area

• Remote Area

• Hilly Area

• High Court Judges

• Supreme Court Judges

• Employee of UNO

                        Income Tax Perquisite

• Amount paid for the rent-free accommodation provided to the assessee by his employer

• Any concession in the matter of rent respecting any accommodation provided to the assessee by his employer

                         Tax Free Perquisites

• Medical facility

• Medical reimbursement

• Refreshments

• Telephone Bills

• Insurance premium paid by employer

• Loans to employees by given by employer

• Transportation

• Training

• House without rent