Income under the Head ‘Salary’
Introduction
Income under the head ‘Salary’ is computed on a due or receipt basis, whichever is earlier. It includes taxable allowances, perquisites, retirement benefits, and profits in lieu of salary, with permissible deductions.
Tax Deduction at Source (TDS)
- TDS Deduction (Section 192):Employers deduct tax at the time of payment, based on the employee’s estimated annual tax liability.
- TDS Certificate:Employers issue Form 16, containing details of tax deducted.
- TDS Statements:Filed quarterly in Form 24Q, with comprehensive details in the final quarter.
Computation of Salary Income
Income under salary is taxable based on the earlier of accrual or receipt. Components of computation include:
- Gross Salary:Includes allowances, perquisites, retirement benefits, pensions, and profits in lieu of salary.
- Deductions:
- Entertainment allowance
- Employment tax
- Standard deduction