Computation of income under the head salary pdf

Global expatriate tax guide grant thornton international. The operation of paye is based on the income tax pay as you earn regulations. Section b heads of income and computation of total income and tax liability study note 5. Salary income of an employee is to be computed in accordance with the provisions laid down in sections 15, 16 and 17. Various examples of calculation of income tax learn. Tax on salary income india how is income tax deducted. Paying higher tax disappoints everyone, so in order to save on taxes it is very important to know that under which salary slab one falls. Income from salary salary xxxxx allowances received taxable allowances xxxxx taxable value of perquisite xxxxx gross salary xxxxx less. To understand the computation of income under the head salaries, the following important concepts must be understood. Income under each head has to be computed as per the provisions under that head. Compute taxable income under several heads of income i. List of different forms of salary for computation of income under the head salary. Five heads of income eligible for income tax computation. Today we are providing complete notes on income under head salary.

Computation of salary income section 1517 definition of word salary section 171 section15. Under the head of income from salaries, any income earned by an individual is include income tax computation. Tally ledger groups list ledger under which head or group. How to calculate taxable income on salary bankbazaar. Section 15, 16 and 17 of the income tax act, 1961 deal with the computation of income under the head salaries. V sem tax subject income tax law and practice 45, anurag nagar, behind press complex, indore m. Format for computation of income under income tax act. Section 15 chargeabilty section 16 deductions section 17 definitions basis of charge sec 15 a any salary due from an employer of a former employer. And this relation is said to exist only if there is control over the method of doing the work of other person. Rent of house property is taxable under the head income from house. You are required to compute his gross salary from the details given below. Income tax calculator how to calculate income tax for fy. For charging tax under income under the salary the foremost requirement is that the relationship of employer and employee must subsist between the payer and payee.

Deduction us 16 a professional tax xxxx b entertainment tax xxxx xxxxx 8 income under head salaries 67 xxxxx. Salary coverage, employer and employee relationship, allowances, monetary and nonmonetary perquisites valuation and taxability, profits in lieu of salary, deductions against salary, incomes exempt from tax and not includible in salary. Income from house property shall be taxable under this head if following conditions. Computation of income under the five heads of income as per the income tax act, 1961. Indian tax system is divided into mainly two parts, direct tax and indirect tax.

Calculate his income tax liability for financial year 201415 assessment year 201516. Income tax rulesincome included under the head salaries. Income from salary, income from business or property, income from capital gains, income from house property, and income from other sources. It is important to know what is the income that is chargaable under salaries while computation of income tax. Applicable rate of tax on income chargeable under the head salaries for the financial year 201617 i. Income computed under each head shall be added up to compute the gross total income.

Computation of taxable income under the head income from other sources. If any income falls under one head, it cannot be considered under any other head. The provisions and rules are according to the details mentioned in the income tax act. This income is taxable under the head income from other sources. This income is taxable under the head profits and gains of business and professions. The income tax regulations allow individuals to derive income from five sources, viz. Section 15, as discussed earlier gives the scope of this head and tells us that which incomes shall form part of this head. Computation of total income ca ipcc tax superprofs. However, the salary received by a person as a minister of central governmentstate government is chargeable under. Salary, house property, business or profession and capital gains. All taxable income under this head is calculated according to the accounting method the assessee follows viz. Unit iii computation and taxable income from salary head. No other deduction on account of any expenditure is allowed. Important points characteristics for computing salary income.

Taxation of salary income and valuation of perquisites. Understanding the head of income from salary, its components, features, the charging section, computation of salary income, allowances and perquisites. Computation of income under head salaries for computation of income under head salaries following sections have to be understood sections 15 basis of charge section 16 deductions from salary income section 17 definition and different forms. The institute of chartered accountants of india heads of income 4. Thus, relationship of employer and employee must exist to create salary income. Section 14 of the act, has classified five different heads of income for the purpose of computation of total income. In previous article we have given what is taxable income and pan card changes w. Income under head salary is taxable only if there is employer, employee relationship between payer and payee. Income tax rulesincome chargeable under the head salaries.

A standard deduction of 30% of net annual value would be allowed as a deduction from net annual value, irrespective of expenditure incurred. Rental income from properties owned by a person other than those which are occupied by him are charged as income from house property. Treatment of income from different sources income tax. Income under the head businessprofession 10 v cash assistance by whatever name called received or receivable by any person against exports under any scheme of the government of india. Receipt from a person other than employer are taxable under other source. There must be a property consisting of building or land appurtenant thereto the assessee should be owner of that property such property should not be used for business or profession of assessee the profits of which are chargeable to tax. Tiwari chargeable to tax in india under the head profits and gains of business or profession for the a. Section 16 gives deductions to be allowed out of incomes taxable under this head. Relevant groups in tally for purchase sale entries relevant groups and ledgers in tally for gst entries summary of different groups if you face any problem in choosing ledger or any problem in tally, excel, accounts or tax, you can ask us here or learn free at agar apko ledger chunne main koi dikkat ho,ki kaunsa ledger kis head main ayega to aap humse yaha puch. Salary in common parlance means any amount paid by an employer to his employees in lieu of services rendered by them. The government has classified the sources of income under separate heads and then the income tax is computed accordingly.

Income from business under section 44bba at 5% of rs. X, aged 45 years, submitted the details of his income and investment for financial year 201415, as under. Any remuneration paid by an employer to his employee in consideration of his service is called salary. It includes monetary value of those benefits and facilities provided by the employer which are taxable.

Perquisites part3 practical problem income from salary income tax for b. Sections 15, 16 and 17 of the income tax act deal with the computation of income under the head salaries. Doc computation of income under the five heads of income. Computation of income under head salary computation of income under head salary mar 19 2015 to give more clarity to the users of our blog, here an attempt is made for detail case study on computation of income under salary. Income tax deduction from salaries under section192 of the income. Income tax act 1961 applies the direct tax laws relating to. Relationship of employer and employee must exist to create salary income. It is residuary head of income which must satisfy the following conditions. Then, subject to provisions of set off of losses between the heads of income, the income under various heads has to be added to arrive at a. Income tax deduction from salaries during financial year. The exceptions to this are dividend and interest income i. Only receipts from employer are taxable under this head. Computation of income under head salaries under income tax. The five main heads of income according to the abovementioned section 14 for the computation of the income tax in india.