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Computation of "Gross Salary" Income


Any amount received by an Employee from an Employer is known as Salary. To receive / give salary, there was to be an Employee-Employer relationship.

What is GROSS SALARY according to Income-Tax ?


  1. Basic Salary or Wages, Bonus, Pension, Gratuity (beyond exempted limit), Leave Salary or encashment, Advance Salary,  Salary arrears, Fee or Commission, Remuneration for extra work,  Ex-gratia, Award for excellence etc.

  2. Allowances such as House Rent Allowance, Dearness Allowance, City Compensatory Allowance, Children’s Education Allowance, Conveyance Allowance, Fixed Medical Allowance and any other Special  Allowances.

  3. Perquisites - viz., Rent Free Accommodation, Amount spent or paid by the Employer on behalf of the Employee in respect of Gas, Electricity, Water Charges, Children’s School Fee, Club Fees, etc.

  4. Benefit received in place of Salary which includes Retrenchment Compensation (Amount given to an employee when his services are no more required).

  5. Pension received from former Employer is taxable as “Salaries”. However, Family Pension is taxed as income from other sources and is eligible for deduction up to Rs.15,000 or 33.33% whichever is less u/s 57 (ii a).

However Gross Salary does not include :
(1)  Retirement Gratuity / Death Gratuity u/s 10(10)
(2)  Sumptuary Allowance
(3)  Medical treatment Reimbursement (with restrictions)
(4)  Leave Travel Concession
(5)  Uniform Allowance
(6)  Leave encashment at retirement u/s 10(10AA)
(7)  Free Meals / Refreshment  provided during office hours. How Salary is Computed :

This can be depicted in the form of Chat given below

Computation of "Gross Salary" Income

 Important Links....for calculating Salary Income

(A). Salary -Definition & Meaning
(B). Provident Fund
(C). Allowance
(D). Perquisites
(E). Profit in lieu of Salaly
(F). Retirement Benefits
(G). Deductions
(H). Table Presentation of Salary Income (Section 15 to 17)
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Taxation in Business & Profession [Section 28 to 44]
Taxation in Business & Profession [Section 28 to 44]

Computation of income under the head 'Profits and Gains of Business or Professions' [Section 28 to 44]

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Tax Computation with Assessment of Salaried Person, HUF, Individuals
Tax Computation with Assessment of Salaried Person, HUF, Individuals.

Computation of Income with Assessment Under the Head 'Salary', 'HUF', 'Individuals'.

Salaried Person
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