What is salary as Income Tax of India

+1 vote
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asked May 16, 2015 in Tax and Taxation by Rajesh Verma
What is the salary as per Income tax laws of India? What constitutes the salary?

1 Answer

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answered May 16, 2015 by Bharat Sinha Experts

Salary is the remuneration received by an individual for service rendered as a result of an express or implied contract. The statute gives an inclusive but not exhaustive definition of salary.

As per Section 17(1), salary includes the following:

  1. Wages
  2. Annuity or pension
  3. Gratuity
  4. Fees, commission, perquisites or profits in lieu of salary
  5. Advance salary
  6. Receipt from provident fund
  7. Contribution of employer to a recognised provident fund above prescribed limit
  8. Leave salary
  9. Compensation as a result of variation of service contract and
  10. Government contribution to a pension scheme

Salary typically comprises the following components:

  • Basic salary
  • Dearness allowance (DA)
  • House rent allowance (HRA)
  • Conveyance allowance
  • Leave travel concession
  • Special /performance allowance
  • Variable pay

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