Indian Income Tax
Tax4india ›› Salary And Perquisites›› Income From Salary

Income From Salary

As per the income tax law in India any income that is generated under the territory of the country is subjected to the income tax. Salary is taxed differently than the products as income tax is applicable on salary where as on commodities there is service tax and value added tax is applicable on it. The term salary is defines as any kind of remuneration that is generated through professional services, personal services and from different jobs in the organization.


Section 17 of the income tax act includes:

  • Basic salary
  • Wages
  • Annuity
  • Provident fund (PF)
  • House rent allowance (HRA)
  • Gratuity
  • Cess tax and incentives generated from the salary
  • Miscellaneous amount
  • Finance tax
  • Any encashment of leave salary
  • Transport allowance

The essential conditions to notify the income as the salary income:

  • The employee and the employer relationship are of servant and master. There should be a relationship. It is different than the principal and agent as agent won’t come under the full control of the employer. In India M.L.A is not come under the head salary due to the fact that it not comes under employee and employer relation ship bracket.
  • In all the government organizations pension is deducted as it is mandatory to do so.
  • Any salary that is generated outside India is taxable as per Indian income tax law.
  • Provident fund is mandatory in government as well as in the private organization.
  • As per Provident fund rule half of the amount is deducted from the salary of the employee and half of the amount will be added by the company or government. Most of the time employee claims their provident fund after leaving the job, however there is an exceptional clause under which employee can claim half of his provident fund amount at the time of buying a property or his/her wedding.

Exemption of tax in the salary:

This is a myth that every income is taxable that is received from an employer:

  1. Any traveling facility provided by an employer to its employee such as train or airplane passes is not come under the tax bracket.
  2. Gratuity amount is also not subjected to the income tax.
  3. Any payment received by the employee of central or state government from the encashment of his/her leave balance is entitled of exemption from tax.
  4. As per the provident fund act 1925. Provident fund amount is also exempted from the tax list.
  5. Any sum received under life Insurance policy is exempted from the list as per sub section (3) of section 80DDA.
  6. Income received by way of pension received by an individual or family for a member who was employed with central government/state government is also exempted from a tax list.
  7. Armed force professional who won the gallantry award for their services towards the country are exempted from the list of income tax. Employees of central or state government who have won Param vir Chakra, Maha vir chakra and any other notified gallantry awards are exempted from the tax list.
India Tax System
Income Tax
Service Tax
Wealth Tax
Sales Tax
Salary & Perquisites
Gift Tax
Capital Gains
Retirement Benefits
Housing Property
Partnership Firms
VAT In India
Indian Budget 2009-10
Corporate Tax in India
Tax Structure in India
Tax Planning for 2010
Investment In India
Savings Schemes In India
Mutual Funds
FDI in India
Portfolio Management Services
ULIPs or Mutual Funds
Financial Planning Process
Risk and Return Analysis
Financial Instruments for Tax Saving
Estate Planning
Hedge Funds
Emerging Investment Avenues
Equity and Equity Capital
Investment in Art
Investments in Global Markets
Options Trading
Measures for Security and Portfolio Analysis
Current Accounts
Working Capital
NRI Investments
Online Trading
Forex Trading
Day Trading
Types of Banks
Introduction to Depositories
Value and Growth Investing
Stock and Commodity Trading
Finance & Economy In India
Capital Market
Foreign Exchange Market
Fundamental Analysis
Money Market
Reserve Bank of India
Stock Markets
Technical Analysis
Economic Policies
Personal Finance
Corporate Finance
Economy of India
GDP India
Credit Crisis
Financial Ratios
Anti Money Laundering
Regulatory Environment
Financial Intermediaries
Securities and Exchange Board of India
Insurance Regulatory and Development Authority
Money and Its Importance
Role of Banks
Automated Teller Machine
Branch Banking
Internet Banking
Phone Banking and Mobile Banking
Banks as Financial Intermediaries
Demat Account
Demand Deposits
Term Deposits
Retail Loans
Investment Banking
Indian Law
Indian Law

Sitemap | Our Partners