Computation of "Gross Salary" Income

1.1.      WHAT IS “ GROSS SALARY”  AND HOW IT IS COMPUTED ?

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 ?

GROSS SALARY means :

  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
MORE TOPICS ...
Allowances Under Section-10 & 17(3) under Head 'Salary' Income
Chart Showing Computation of 'Salary' Income
Computation of 'Gross Salary' Income
Computation of 'Net Salary' Income :
Deduction under Chapter VI-A

Retirement Benefits

1.       Major Retirement benefits gets by the Employee

2.       Tax Treatment of ‘Leave Encashment’

3.       Tax Treatment of ‘Gratuity’

4.       Tax Treatment of ‘Pension’
Other Benefits & Facilities gets by the Salaried Employees
Arrear of Salary and relief under section 89(1)
Deduction Under Section 80 C ( How to Find Out)
Exemption Specified in Income Tax Rules in 'Salary' Income
'Perquisies' and 'Income Tax - ( Taxable and Exempted) - Salary :
Computation of 'Profit in Lieu of Salary' (Sec-17(3)
Computation of Income Under Head 'Salaries' under Income Tax
 
 
 
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