Any payment received or due in addition to your salary or wages from your employer is called profit in lieu of salary. Section 17 (3) of income tax act defines profit in lieu of salary as follows; "Profits in lieu of salary" includes— (i) the amount of any compensation due to or received by an assessee from his employer or former employer at or in connection with the … [Read more...] about What is profit in lieu of Salary – Section 17(3) of Income Tax Act
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VRS (Voluntary Retirement Scheme) – exemption from income tax
Voluntary retirement scheme (VRS) is an early retirement option given by the employer to its eligible employee by compensating them for taking a early retirement. Most of the public sector banks, PSU and private companies opted for voluntary retirement scheme (VRS) in past to restructure there organization. Voluntary retirement scheme (VRS) is also accepted by trade union as … [Read more...] about VRS (Voluntary Retirement Scheme) – exemption from income tax
Leave Travel Allowance (LTA) Exemption under Income tax Act
Leave travel allowance or LTA is an allowance received by an employee from his employer to travel any likable place according to his choice. LTA can be obtained every year from the employer but the exemption can be claimed two times in a block of 4 years. The recent block of 2010-2013 for leave travel allowance will be over on 31st December 2013. If for any reason you are … [Read more...] about Leave Travel Allowance (LTA) Exemption under Income tax Act
Gratuity – Section 10(10) of Income tax act
Gratuity is a payment made by the employer in appreciation of past services of employee. It can be paid at the time of retirement or resignation or termination of employee from his employment. Income tax act provides exemption for the amount an employee receives as gratuity from his employer. After this exemption the rest will be taxable in the hand of employee under the head … [Read more...] about Gratuity – Section 10(10) of Income tax act
Income Tax Planning for a Salary Individual
Most of the employees are paying higher income tax because of non inclusion of certain components which are exempted. Restructuring their salary components and investing in certain specified investments might help them in reducing their tax liability. Restructure your Salary You can include following components to your salary to reduce your tax liability: Medical … [Read more...] about Income Tax Planning for a Salary Individual
How salary is taxable in India
For income tax purpose, any income earned by an individual is classified in to 5 different heads of income and income tax is charged on such income according to the act and rule prescribed. Those five major head of incomes are; Salary House Property Business and Profession Capital Gain Other Sources If during the financial year, you have generated any amount as … [Read more...] about How salary is taxable in India
Incomes to be disclosed in addition to your Salary
Most of the individuals do not disclose certain incomes as those are not noticed by them while filing there IT return. As per the provisions of IT act, all incomes are taxable if it’s not exempted specifically under the act. When you get your form 16 from your employer, it will contain only your salary for the financial year and not the other incomes that you are receiving … [Read more...] about Incomes to be disclosed in addition to your Salary
Is Your Salary Allowance Taxable in India
Allowance is money that you get from your employer for meeting some particular expenses such as transport, HRA. All these allowances are taxable unless it is specifically exempted under income tax act. There are two types of allowance as defined under income tax act; House Rent Allowance Prescribed Allowance House rent allowances are exempted from income tax based on … [Read more...] about Is Your Salary Allowance Taxable in India
How salary is defined under Income Tax Act
The term salary is defined under section 17 (1) of the income tax act to include following items as salary; Wages Any annuity or pension Any gratuity Any fee, commission, perquisite or profit in lieu of salary 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 by him The … [Read more...] about How salary is defined under Income Tax Act