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Last modified / updated Feb. 04, 2016

Income Tax Act, 1961 : Income Exempted and Chargeable under the Head "Salaries"


The following income shall be chargeable to income-tax under the head "Salaries"

  • any salary due from an employer or a former employer to an assessee in the previous year, whether paid or not;
  • any salary paid or allowed to him in the previous year by or on behalf of an employer or a former employer though not due or before it became due to him.
  • any arrears of salary paid or allowed to him in the previous year by or on behalf of an employer or a former employer, if not charged to income-tax for any earlier previous year.

    Any salary, bonus, commission or remuneration, by whatever name called, due to, or received by, a partner of a firm from the firm shall not be regarded as "Salary".


    "Salary" includes:-
  • wages, fees, commissions, perquisites, profits in lieu of, or, in addition to salary, advance of salary, annuity or pension, gratuity, payments in respect of encashment of leave etc.
  • the portion of the annual accretion to the balance at the credit of the employee participating in a recognized provident fund as consists of {Rule 6 of Part A of the Fourth Schedule of the Act}:

    a) contributions made by the employer to the account of the employee in a recognized provident fund in excess of 12% of the salary of the employee,

    b) interest credited on the balance to the credit of the employee in so far as it is allowed at a rate exceeding such rate as may be fixed by Central Government. [w.e.f. 01-09-2010 rate is fixed at 9.5% - Notification No SO 1046(E) dated 13- 05-2011]

  • the contribution made by the Central Government or any other employer to the account of the employee under the New Pension Scheme as notified vide Notification F.N. 5/7/2003- ECB&PR dated 22.12.2003 referred to in section 80CCD

    It may be noted that, since salary includes pension, tax at source would have to be deducted from pension also, unless otherwise so required. However, no tax is required to be deducted from the commuted portion of pension to the extent exempt under section 10 (10A).

    Family Pension is chargeable to tax under head "Income from other sources" and not under the head "Salaries". Therefore, provisions of section 192 of the Act are not applicable. Hence no TDS is required to be made on family pension.

    Links & Description of Contents

    Scheme of Tax Deduction at Source from "Salaries"Income Chargeable under - "Salaries"Income Exempted Under The Head "SALARIES"
    1 - Section 192 Provisions on Taxable Income
    2 - Relief When Salary Paid in Arrear or Advance
    3 - Claim of Deduction of Interest u/s 24 (b)- Income from House Property
    4 - Due dates for payment of TDS
    5 - Interest, Penalty & Prosecution for Failure to Deposit Tax Deducted
    6 - Certificate for Tax Deducted (Section 203)
    7 - TRACES
    8 -Furnishing Particulars pertaining to perquisites
    9 - Mandatory Quoting of PAN and TAN
    10 - TDS on Income from Pension
    11 - Income Chargeable Under the Head "Salaries"
    12 - Definition OF "Salary"
    13 - Perquisite - Rent Free Accomodation & Motor car provided by the Employer
    14 - Perquisite - Gas, electricity & water for household consumption
    15 - Interest free or concessional loans
    16 - Value of Subsidized / Free food / non-alcoholic beverages
    17- Transfer Grant Allowance
    18 - Medical Reimbursement by the Employer
    19 - Leave Travel Concession (LTC)
    20 - Death-cum-Retirement Gratuity
    21 - Commutation of Pension
    22 - Leave Encashment
    23- Retrenchment Compensation
    24 - Amount received on voluntary retirement
    25 - Sum received under a Life Insurance Policy
    26 - Payment from a Provident Fund
    27 - House Rent Allowance
    28 - Pension to Gallantry Awarded
    29 - Medical Treatment provided by Employer
    30 - Entertainment Allowance
    31 - Professional Tax

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