SALARY in various heads for the income tax actx

Salary heads in tax

1. INCOME UNDER HEAD SALARY (SECTION 15) Team 1: VIGILANTS

2. INTRODUCTION Income Under the head Salary. One of the 5 heads of Income Chargeable to Tax Significant, owing to the fact that a substantial portion of total tax payers in India are salaried individuals. Income received by someone on the basis of an employee-employer relationship!

3. RELEVANT SECTIONS AND RULES CONCERNING INCOME FROM SALARY Income Tax Act The relevant sections mainly come under chapter IV. Sections covered:15,16 and 17. Section 10 discusses certain exemptions.

4. SECTION 15 This section gives the basis of charge of Tax on Income from Salary. Sec 15: The following income shall be chargeable to income-tax under the head "Salaries"— (a) any salary due from an employer or a former employer to an assessee in the previous year, whether paid or not; (b) 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; (c) 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.

5. Explanations: For the removal of doubts, it is hereby declared that where any salary paid in advance is included in the total income of any person for any previous year it shall not be included again in the total income of the person when the salary becomes due. 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" for the purposes of this section.

6. SECTION 16 Mentions the deductions to be done while computing the income of a person under the head salary. Sec 16: The income chargeable under the head "Salaries" shall be computed after making the following deductions, namely: ( i ) [***] ( ia ) a deduction of fifty thousand rupees or the amount of the salary, whichever is less; (ii) a deduction in respect of any allowance in the nature of an entertainment allowance specifically granted by an employer to the assessee who is in receipt of a salary from the Government, a sum equal to one-fifth of his salary (exclusive of any allowance, benefit or other perquisite) or five thousand rupees, whichever is less; (iii) a deduction of any sum paid by the assessee on account of a tax on employment within the meaning of clause (2) of article 276 of the Constitution, leviable by or under any law. (iv) [***] (v) [***]

7. SECTION 17 Defines exactly what kind of receipts arising out of an employee-employer relationship are chargeable to tax! It also mentions the exemptions i.e , certain receipts arising out of such a relationship but either not taxable or partly taxable! Contains 3 detailed clauses! Contd...

8. Section 17 is further divided into 3 clauses: Section 17(1): Defines what are the basic salary receipts that are chargeable to Income Tax: Section 17(2): Different kinds of perquisites given by the employer and their taxability. Section 17(3): Deals with profits in lieu of salary.

9. SECTION 10 Discusses about exemptions while computing a person's income Certain receipts on the basis of the employee-employer relationship are also mentioned in this section Examples: 10(5): LTC 10(13A): Allowances for accommodation purpose 10(10C): Payment on Voluntary retirement or termination Reference to specific rule of the Income Tax Rules.

10. RELEVANT INCOME TAX RULES CONCERNING INCOME FROM SALARY Rules 2A, 2B, 2BA, 2BB, 2BBA, 2BBB, 2BC, 2C, 2CA, 2D, 2DA, 2E. Rules relating to perquisites: 3, 3A.

11. INCOME FROM SALARY Under the Income Tax Act of 1961 in India, the distinction between "salary" and "profession" is important for determining how income is taxed. Let’s look for the differences and breakdown:

12. Salary v/s Profession Definition: Salary: De fined under “Section 15” of the Income Tax Act. It includes wages, pension, annuity, and other forms of compensation paid by an employer to an employee. Profession: Typically refers to a business or profession where individuals earn income through their specialized skills or services, such as doctors, lawyers, engineers, consultants, etc. This income is covered under “Income from Profession” .

13. Components Salary Basic salary House Rent Allowance (HRA) Special Allowances Bonus Commission Any other payment received by the employee from the employer Profession Income earned from the practice of a profession. Includes fees received for services rendered or any other professional activities.

14. Differences Salary Nature of Income: Compensation received as an employee. Tax Calculation: Taxed based on total salary with specific deductions allowed under various sections (Sec. 15). Deductions & Exemptions: Certain deductions and exemptions are available (like HRA, PF, etc.). Profession Nature of Income: Income earned through independent practice or business activities. Tax Calculation: Taxed based on business profits, with allowances for business expenses and potentially under presumptive taxation schemes (Sec. 28). Deductions & Exemptions: Business expenses can be deducted, and specific provisions may apply depending on the nature of the profession.

15. Point to Note: Understanding these distinctions is crucial for proper tax planning and compliance. If you're involved in both salary and professional activities, it's advisable to maintain clear records and possibly consult a tax professional to ensure accurate filing and tax optimization.

16. BASIC COMPONENTS OF SALARY “Salary” includes: Wages; Any annuity or pension; Any gratuity; Any fees, commissions, perquisites or profits in lieu of or in addition to any salary or wages; Any advance of salary; Any payment received by an employee in respect of any period of leave not availed of by him; Contd...

17. BASIC COMPONENTS OF SALARY (… contd ) (vii) The annual accretion to the balance at the credit of an employee participating in a recognised provident fund, to the extent to which it is chargeable to tax under rule 6 of part a of the fourth schedule; (viii) The aggregate of all sums that are comprised in the transferred balance as referred to in sub-rule (2) of rule 11 of part a of the fourth schedule of an employee participating in a recognised provident fund, to the extent to which it is chargeable to tax under sub-rule (4) thereof; (ix) The contribution made by the central government or any other employer in the previous year, to the account of an employee under a pension scheme referred to in section 80ccd.

18. PERQUISITES “Perquisite” includes: ( i ) The value of rent-free accommodation provided to the assessee by his employer; (ii) The value of any concession in the matter of rent respecting any accommodation provided to the assessee by his employer; (iii) Cost of furniture (including television sets, radio sets, refrigerators, other household appliances, air-conditioning plant or equipment or other similar appliances or gadgets) or if such furniture is hired from a third party, the actual hire charges payable for the same as reduced by any charges paid or payable for the same by the assessee during the previous year. (iv) Use of any vehicle provided by a company or an employer for journey by the assessee from his residence to his office or other place of work, or from such office or place to his residence, shall not be regarded as a benefit or amenity granted or provided to him free of cost or at concessional rate. Contd …

19. PERQUISITES (… contd ) (v) any sum paid by the employer in respect of any obligation which, but for such payment, would have been payable by the assessee . (vi) any sum payable by the employer, whether directly or through a fund, other than a recognised provident fund or an approved superannuation fund. (vii) the value of any specified security or sweat equity shares allotted or transferred, directly or indirectly, by the employer, or former employer, free of cost or at concessional rate to the assessee . (viii) the amount of any contribution to an approved superannuation fund by the employer in respect of the assessee , to the extent it exceeds one lakh rupees. (ix) the value of any other fringe benefit or amenity.

20. profits in lieu of salary “Profits in lieu of Salary” includes: The amount of any compensation due to or received by an assessee from his employer or former employer at or in connection with the termination of his employment or the modification of the terms and conditions relating thereto. Any payment, due to or received by an assessee from an employer or a former employer or from a provident or other fund, to the extent to which it does not consist of contributions by the assessee or interest on such contributions or any sum received under a Keyman insurance policy including the sum allocated by way of bonus on such policy. Any amount due to or received, whether in lump sum or otherwise, by any assessee from any person before his joining any employment with that person; or after cessation of his employment with that person.

21. ALLOWANCES Dearness Allowance (DA) House Rent Allowance (HRA) Travel Allowance Children Education/ Hostel Allowance Other Allowances Entertainment Allowance Medical Allowance

22. 1. Dearness Allowance (DA) Dearness allowance is a component of salary of the government employees and pensioners. 50% of Basic pay in current period. Increase twice in every year (six months tenure).

23. 2. House Rent Allowance (HRA) Exempted u/s 10 (13A) House rent allowance is an allowance given by an employer to an employee to cover the cost of living in rented housing. Calculated as: HRA Received from employer Rent paid by employee - (10% of Basic + DA) 50% or 40% of (Basic + DA) 50% is for metro cities (Delhi, Mumbai, Kolkata and Chennai only) for others 40%. Among above whichever is lower.

24. Example for HRA For Salary is Rs. 8,31,600 (Basic + DA) a) Actual HRA received: Rs. 1,66,320 b) 50% of salary (Basic + DA): Rs. 4,15,800 c) Actual rent paid: Rs. 96,000 -10% (Basic + DA) Rs. 96,000 - 83,160 = Rs. 12,840 (Exempt) Taxable : Rs. 1,66,320 – Rs. 12,840 = Rs. 1,53,480

25. 3. Travel Allowance Exempted u/s 10(14) F ully exempted for office purpose (Transport allowance). F ully taxable f or office to home and vice versa. F or handicap person Rs. 3200 p.m exempt.

26. 4. Children Education Allowance/ Hostel Allowance Exempted u/s 10(14) Upto Rs. 100 p.m per child up to 2 children’s only. Upto Rs. 300 p.m per child up to 2 children’s only.

27. 5. Other Allowances Allowances for overtime, telephone, servant, project etc. are fully taxable.

28. 6. Entertainment Allowance Fully taxable for non-government employees If the individual is a government employee then least of the following will be allowed as a deduction: Actual amount of entertainment allowance received 20% of basic salary (No DA) Rs. 5000 p.a

29. 7. Medical Allowance Reimbursement fully taxable (exempted upto Rs. 15,000 p.a if the employee provides actual medical bills to the employer as proof of expenses incurred ) specified decease/ specified hospital.

30. PERQUISITES (Part 1) Perquisites u/s 17(2): Perquisites are benefits one enjoys on account of one jobs. Perquisites are facilities provided by the employer and is taxable. Three Types: Taxable in cases of all employees Tax free in cases of all employees Taxable in hands of specified employees.

31. Rent free accommodation (govt. employees) If the accommodation is provided by the central or state government to the employee, the taxable value will be the license fees as determined by the govt. in accordance with service rules. Unfurnished accommodation: License fees Furnished accommodation: Taxable value of perquisite in unfurnished accommodation + 10% of original cost of furniture.

32. Rent free accommodation (non- govt. employees) Unfurnished accommodation Till 31.08.2023 From 01.09.2023 Population of city Perquisite Value Up to 10,00,000 7.5% of Salary 10,00,000 to 25,00,000 10% of Salary 25,00,000 and above 15% of Salary Population of city Perquisite Value Up to 15,00,000 5% of Salary 15,00,000 to 40,00,000 7.5% of Salary 40,00,000 and above 10% of Salary

33. Rent free accommodation (non- govt. employees) (… contd ) Furnished accommodation: Taxable value of perquisite in unfurnished accommodation + 10% of original cost of furniture (if owned by the employer). If the employer takes an unfurnished property on lease or rent and provide to the employee the taxable value shall be lower of 10% of salary or the actual rent paid by the employer .

34. Rent free accommodation when not taxable Rent free accommodation provided to an employee working at mining site, an offshore oil exploration site, a dam site, power generating site or an offshore site shall not be taxable. If the house is allocated to judges of High court, judge of Supreme Court, officer of parliament, a union minister and members of UPSC.

35. Free /concessional food and non- alcoholic beverages . Meal provided in office in excess of Rs. 50 is a perquisite, hence taxable . Tea or snacks provided during working hour is not taxable.

36. Gifts, Vouchers or Tokens. Cash gifts are fully taxable (actual cost to the employer) If received in kind, exempt upto Rs. 5000/-.

37. PERQUISITES (Part 2) Sweat equity shares/Securities issued by employer : Taxable Perquisite Taxable Value = Fair Market Value - Price paid by employee Contd...

38. Children Education Facility If employer’s school If other school Scholarship to children: Fully exempt Cost is less than Rs. 1000 p.m ( upto 2 children) Fully exempt Cost exceeds Rs. 1000 p.m Cost of education in similar institution - Rs. 1000 p.m - amount recovered Taxable perquisite Actual fee- 1000 p.m

39. Medical Perquisites Medical Facility in India is fully exempt if: Employer’s Hospital Govt. hospital Private Hospital (if empaneled ) Hospital approved by Pr.CCIT /CCIT Medical insurance Paid by Employer then fully exempt

40. Medical Allowance Fully Taxable Any reimbursement of medical expenses incurred by an employee that does not meet the tax-free criteria is taxable as a perquisite. Exemption Limit: Reimbursement of up to ₹15,000 per annum (for prior years, now not applicable) was earlier exempted, but post the Finance Act 2018, this exemption is no longer available.

41. PERQUISITES (Part 3) Valuation of Perquisites for Motor Car: Rule 3(2) When car is owned and hired by the employer and used for: Office Purposes – Nil Personal purposes – Actual Running & Maintenance + Actual Chauffeur Expenses + wears & tear @ 10% of Cost OR Actual Hire Charges. Partly Official and Partly Personal Purpose. Running & Maintenance Expenditure is borne by Employer up to 1.6 Liters CC Rupees 1,800 p.m. Exceeding 1.6 Liters CC Rupees 2,400 p.m. Running & Maintenance Expenditure is borne by Employee up to 1.6 Liters CC Rupees 600 p.m. and Rupees 900 p.m. exceeding 1.6 Liters CC. Add: Rupees 900 per month if Chauffeur is also provided by the employer. (both cases).

42. Rule 3(2) (… contd ) B. When car is owned and used by employee (Running & maintenance incurred /reimbursed by employer): Exclusively for Official purpose: NIL (Not Taxable if specified documents maintained) Exclusively for personal purpose: Actual expenditure incurred by employer (excluding amount recovered from employee) is Taxable. Partly official partly personal: Taxable value: Actual expenses incurred Less Up to 1.6 Liters CC Rupees 1,800 p.m. Exceeding 1.6 Liters CC Rupees 2,400 p.m. Less 900 p.m. for chauffeur (if any) Less Amount recovered from employee Note:- If actual expenses incurred for official purpose is more than the above limits (1800/2400 and 900), actual expenditure deducted by maintain specified documents.

43. EMPLOYER’S CONTRIBUTION TOWARDS APPROVED SUPERANNUATION FUND The amount of any contribution to an approved superannuation fund by the employer in respect of the assesse (employee), As per The budget 2020 presented on the 1st of February 2020 announced a combined upper limit of Rs 7.5 lakh in respect of the employer’s contribution to NPS, RPF, and Superannuation fund in a year. That means any contribution made by the employer in excess of Rs 7.5 lakh will be taxable as perquisites in the hand of the employee.

44. EMPLOYER’S CONTRIBUTION TOWARDS NATIONAL PENSION SCHEME Deduction to NPS scheme for contribution by the employer, deduction u/s 80CCD(2) is available. Employer contribution up to 14% of the salary of individual is allowed as deduction u/s 80CCD(2). 12% of salary is allowed in case of recognized provident fund is allowed as deduction. There is a maximum limit of Rs 7,50,000 on employer contribution to PF, NPS and Superannuation fund . Thus any contribution by the employer over and above the limit of such excess amount will be considered as perquisite and taxable under section 17(2) of Income-tax Act.

45. EMPLOYER’S CONTRIBUTION TOWARDS VARIOUS TYPES OF PROVIDENT FUND There are various types of provident fund (PF) accounts that individuals can use to save. The income tax rules for PF contribution, withdrawal and taxability of income on PF vary depending on the type of PF account. There are different types of provident funds utilized by a person for investment or regular savings for retirement. They are as follows: Statutory PF Recognized PF Unrecognized PF Public PF

46. TAX TREATMENT FOR VARIOUS TYPES OF PROVIDENT FUND

47. ADVANCE OF SALARY An advance of salary is a payment made by an employer to an employee before the employee’s regular salary payment date. This payment is usually made in anticipation of an employee’s financial need or emergency. It is fully taxable u/s 15 of the Income Tax Act, 1969. U/S 15(b), any salary paid or allowed to him in the previous year or on behalf of an employer or a former employer though not due or before it became due to him.

48. ARREARS OF SALARY Arrears of Salary refers to any outstanding due of the previous period paid later on in a different assessment year. It is taxable in the year of receipt. U/S 15(c) 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 .

49. Relief when salary is paid in arrears or in advance, etc. Income Tax Rule 21A: Where, by reason of any portion of an assessee's  salary being paid in arrears or in advance or, by reason of any portion of family pension received by an assessee being paid in arrears or, by reason of his having received in any one financial year salary for more than twelve months or a payment which under the provisions of clause (3) of section 17 is a profit in lieu of salary, his income is assessed at a rate higher than that at which it would otherwise have been assessed, the relief to be granted under sub-section (1) of section 89 shall be— where any portion of the assessee's  salary is received in arrears or in advance or, any portion of family pension is received by an assessee in arrears, in accordance with the provisions of sub-rule (2); where the payment is in the nature of gratuity in respect of past services of the assessee extending over a period of not less than five years, in accordance with the provisions of sub-rule (3); Contd …

50. Relief when salary is paid in arrears or in advance, etc. (… contd ) (c) where the payment is in the nature of compensation received by the assessee from his employer or former employer at or in connection with the termination of his employment after continuous service for not less than three years and where the unexpired portion of his term of employment is also not less than three years, in accordance with the provisions of sub-rule (4); (d) where the payment is in commutation of pension, in accordance with the provisions of sub-rule (5); and (e) where the payment is not in the nature of salary paid in arrears or in advance or gratuity in respect of past services or compensation received at or in connection with the termination of employment or in commutation of pension, in accordance with the provisions of sub-rule (6). The relief can only be claimed if the tax payable is higher due to the receipt of such arrears. If there is no extra tax liability, relief is not allowed.

51. Form 10E It is mandatory to file  Form 10E  in order to claim the benefits under section 89(1). The taxpayer needs to file this form online on the  income tax e-filing portal .

52. ENCASHMENT OF EXPENSES, LEAVE SALARY, LTC ETC. Leave salary: Sec.10(10AA) Leave travel concession (LTC)

53. Leave Salary: Sec.10(10AA) Encashment of unutilized leave In lieu of unutilized leave employee gives monetary benefits, this is known as leave salary and taxable subject to conditions. Fully taxable during service. Fully exempted for govt. employees u/s 10(10AA)(1). For non-govt. employees least of the following: Cash equivalent of leave salary for the period of earned leave to the credit of an employee at the time of retirement 10 months ‘average salary’ Amount not chargeable to tax i.e. Rs. 3,00,000/- Leave encashment actually received Leave salary received by family of govt. servant who died in harness is not taxable in the hands of recipient.

54. Leave Travel C oncession (LTC) Employee can reimburse travelling expenses of an employee, this is known as LTC. Exempt u/s 10(5) subject to conditions. 1. LTC on declaration basis – without performing any journey and incurring expenses thereon. No exemption can be claimed 2. On non declaration basis The quantum of exemption will be subject to the following exemption limit: Air Air economy fare of the national carrier (Air India) by shortest route b) Rail 1 st class Air Conditioned rail fare by the shortest route c) Places of origin and destination not connected by Rail. Where no public transport system exist, for shortest route as if the journey is performed by Rail.

55. DEDUCTION FROM SALARY AS PER OLD REGIME Deduction u/s 16 Deduction under Chapter VI-A

56. Deduction u/s 16 Standard deduction u/s 16( ia ): 50,000/- Entertainment allowance u/s 16(ii): 1/5 th of salary Tax of employment u/s 16(iii): 2500/- (For Tamil Nadu)

57. Deduction Under C hapter VI-A Section 80C: Deductions for Investments Maximum Limit: ₹1.5 lakh per financial year. Eligible Investments: Provident Fund (PF) Public Provident Fund (PPF) Life Insurance Premium Equity-Linked Savings Scheme (ELSS) National Savings Certificate (NSC) Tax-saving Fixed Deposits Principal repayment on home loan Sukanya Samriddhi Yojana Senior Citizens Savings Scheme (SCSS) Contd …

58. Deduction Under C hapter VI-A (… contd ) Section 80CCC: Deduction in respect of contribution to certain pension funds. Section 80CCD (1): Deduction in respect of contribution by taxpayer to pension scheme. Section 80CCD (1B): Deduction in respect of amount paid/ deposited to notified pension scheme. Section 80CCD (2): Deduction in respect of contribution by Employer to pension scheme. Section 80D: Health Insurance Premiums For self and family (excluding parents): Up to ₹25,000 per year for individuals below 60 years; ₹50,000 for senior citizens (above 60 years). For parents: Additional deduction up to ₹25,000 (for parents below 60 years) or ₹50,000 (if parents are senior citizens). Contd …

59. Deduction Under C hapter VI-A (… contd ) Section 80E: Deduction in respect of interest on loan taken for higher education. Eligibility: For interest on loans taken for higher education. Duration: Deductible for a maximum of 8 years or until the interest is paid, whichever is earlier. Section 80CCH: Deduction in respect of contribution by the employee to Agnipath Scheme. Section 24(b): Home Loan Interest Maximum Deduction: Up to ₹2 lakh per year on interest paid for a home loan. Eligibility: Must be for a self-occupied property. Contd …

60. Deduction Under C hapter VI-A (… contd ) Section 10(14): Allowances House Rent Allowance (HRA): Can be claimed if you live in rented accommodation. Standard Deduction: ₹50,000 (for FY 2023-24) applicable for salaried individuals and pensioners. Section 80TTA/80TTB: Interest Income Section 80TTA: Deduction of up to ₹10,000 on interest from savings accounts (applicable to individuals below 60 years). Section 80TTB: Deduction of up to ₹50,000 on interest income for senior citizens (above 60 years). Contd …

61. Deduction Under C hapter VI-A (… contd ) Section 80G: Donations to Charity Deduction: Varies depending on the charity and the percentage of deduction allowed by the Act. Section 80U: Disability Deduction: ₹75,000 for individuals with a disability; ₹1.25 lakh for severe disability. Section 87A: Rebate for Income Tax Rebate: Up to ₹12,500 for individuals with a taxable income of ₹5 lakh or less.

62. DEDUCTION FROM SALARY AS PER NEW REGIME All the deductions given in old tax regime are called off in the new tax regime, however a few deductions are still allowed: - Standard Deduction: Rs. 75,000/- from (AY 2024-25). As per Budget 2024: Limit of Standard Deduction against salaried income has been increased from Rs. 50,000 to Rs. 75,000. Limit of maximum Deduction under Family Pension has been increased from Rs. 15,000 to Rs. 25,000.  The deduction on employers contribution to pension Scheme as per Section 80CCD (2) has been increased from 10% of salary to the 14% of salary.

63. COMPUTATION OF SALARY AS PER OLD AND NEW REGIME

64. INCOME FROM SALARY Sections 15 to 17 of the IT Act Basis of charge. Deductions. Basic salary receipts, perquisites and profits in lieu of. Some exemptions u/s 10 of the IT Act.

65. INCOME FROM SALARY V/S INCOME FROM PROFESSION Income from salary Any payment received from employer to the employee Basic salary, HRA etc. Special allowances, bonuses, commission Income from profession Earned through skills or services rendered. Taxed under provisions of PGBP

66. DEDUCTIONS (OLD REGIME) Deductions u/s 16 of IT Act Standard deduction Entertainment allowance Tax of employment Deductions under chapter VI-A of IT Act Under various sections of this chapter, deductions are provided for investments, contributions, loan taken, allowances, expenses on health , donations.

67. DEDUCTIONS (NEW REGIME) Most of the deductions are not allowed in the new regime of taxation. Standard deduction and deduction on employers contribution to the pension scheme is still available.

68. INCOME FROM SALARY Income from salary also includes: Wages, annuity, pension, gratuity, fees and commissions, any advance of salary, contribution of employer to pension schemes. allowances Perquisites provided by the employer Profits in lieu of salary

69. SALARY ALLOWANCES Various allowances : Dearness Allowances House Rent Allowance Travel Allowance Children Education/Hostel Allowance Medical Allowance Entertainment Allowance Other allowances such as overtime, telephone, servant allowances

70. PERQUISITES Some of the perquisites provided are : Rent free accommodation For Govt. employees Furnished accommodation Unfurnished accommodation For non-Govt. employees Furnished accommodation Unfurnished accommodation Non taxable cases Mining sites, offshore sites, power generating site etc Judges, MP, union ministers etc

71. PERQUISITES Children education facility Is exempted for Upto 2 children if it does not exceed Rs. 1000 per child per month provided studies in the employers school. Scholarship to children is exempt Medical perquisites Exempted If medical insurance is paid by employer Medical allowances are taxable as salary

72. PERQUISITES Motor car When car is owned and hired by employer Official purpose – exempt Personal - conditional Partly official partly personal - conditional When car is owned by employee Official purpose – exempt Personal – expenditure incurred by employer Partly official partly personal - conditional

73. PERQUISITES Employers contribution towards pension/ various funds .

74. PERQUISITES Free/concessional food and non alcoholic beverage Meal provided in excess of Rs.50 is taxable Tea or snacks during work hour is exempt Gifts vouchers or tokens provided Cash gifts are fully taxable In kind  upto Rs.5000 exempt Sweat equity shares/ securities issued by employer Fully taxable for a value = FMV-price paid by employee.

75. ADVANCE AND ARREARS OF SALARY Advance of salary is when employer pays the employee before the salary date mostly due to some emergency and is taxable as per section 15(b) of IT act. Arrears of salary are any outstanding dues of previous period paid later and are taxable in the assessment year of receipt as per section 15(c) of IT act. Relief can be claimed u/s 89(1) of IT act when there is salary paid in arrears and in order to claim this relief, one has to file the FORM 10E.

76. LEAVE ENCASHMENT When an employee, in lieu of his/her unutilized leaves gets monetary benefit, its called leave encashment. Govt employee During service- taxable At retirement – exempt Non Govt employee  conditions Leave salary received In the hands of family of employee who died in harness is not taxable Employee can reimburse travelling expenses through LTC It is exempt u/s 10(5) of IT act subject to conditions.

77. THANK YOU…