How Salary Income is Taxed in India
Year of Chargeability
1. Due or receipt whichever is earlier
Salary is taxable on due basis or on receipt basis, whichever is earlier. Hence ,
a) Salary due in a previous year is taxable ,even if it is not received
b) Salary received in a previous year is taxable , even if it is not due.
2. No double taxation
Once Salary is taxed on due /receipt basis , it will not be taxed again on receipt / falling due , as the case may be.
The assessee can claim relief u/s 89 for arrears or advance salary
As per article 9 in MUI-CBA Agreement, we are entitled to get salary at the end of every month. So the March salary is due on 31st March and is Taxable in March even if it is not received in March.
Meaning of Salary[section 17]
Salary includes –
- Any annuity or pension
- Any gratuity
- Any fees, commission, perquisite or profits in lieu of or in addition to any salary or wages
- Encashment of leave-not-availed