WHAT IS “SALARY”?
Relationship between payer and payee-
The relationship between payer and payee should be
of an employer and employee, or master or servant.
Only then the amount received will be treated as salary.
Employer may be:
· An individual, firm,
· Association of persons,
· Company, and corporation,
· Central Government,
· State Government,
· Public body or a local authority.
Employer may be operating in India or abroad. The employee may be full time or part time.
The important point is that payment received by an individual from a person other than his employer cannot be termed as salary and
consequently such income is not chargeable to tax under the head “Salaries”.
Salaries and wages not conceptually different.
SALARIES UNDER SEC 17(1)
Under Sec17 (1) salary is defined to include the following:
(a) Wages;
(b) Any annuity or pension;
(c) Any gratuity;
(d) or in addition to any salary or wages;
(e) Any advance of salary;
(f) Any payment received by an employee in respect of any period of leave not availed by him,
(g) The portion of the annual accretion in any previous year to the balance at the credit of an employee participating in a recognized provident fund to the extent it is taxable.
(h) Transferred balance in the recognized provident fund to the extent it is taxable
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