Under Section 15, the following incomes are chargeable to Income-tax under the head ‘Salaries’;
1. any salary due from an employer or a former employer to an assessee in the previous year whether paid or not;
2. 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 becomes due to him;
3. 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.
Under the provisions of this section the amount of salary due in the year, amount of advance salary received and the amount of arrears of salary received during the year from the present or past employer are to be included in this head.
In the explanation attached to section 15, it has been clearly mentioned that 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.
The important rule is that income once taxed cannot be taxed again, so any salary paid in advance (if taxed in a previous year when the advance salary was received) will not be included again in the total income of the person when the salary becomes due. Advance salary does not include loans, e.g., loan to purchase a car or a scooter or for building a house etc.
Any salary, bonus, commission or remuneration, by whatever name called due to or received by a partner of a firm from firm shall not be regarded as salary for the purposes of this section.