There are five heads under total income.

1. Salary
2. Income from House property
3. Income from profits and gains from Business or Profession.
4. Income from Capital Gains.
5. Income from Other Sources.There are five heads under total income.

5

Any compensation paid by an Employer to his Employee in consideration of service is called Salary.

4

Basic Salary
Allowances
Perquisites
Profits in lieu of Salary.

5

The Income Tax Act allows taxpayers to claim deductions from salary income, which is taxable under Income Tax Law.

i.) Standard deduction - Employees can claim a standard deduction of Rs. 50000 from the salary income, or the actual amount of income, whichever is less.
ii) Entertainment Allowance - Only government employees can claim up to a maximum of Rs.5000 maximum.
iii) Professional Tax - Employees can claim professional tax as deductions paid from salary.

1

Standard deductions of Rs50000/- available to pensioners also.

2

Salary of a MP is taxable under the Head “Income from other sources” instead of Salary.

1

Salary of a Partner is chargeable under head “Profits and gains from Business or Profession”.

1

Any Family Pension received by a member of a deceased employee is computed under “Income from Other Sources”.

1

i) Wages.
ii) Pension.
iii) Commission on sales

1

Apart from Salary if the employee receives any extra monetary benefit for running some specific expenditure is known as Allowances.

1

According to taxability, allowance can be divided into following parts.
1. Taxable Allowance.
2. Allowance Exempted to a certain limit.
3. Taxfree Allowance.

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i.) Dearness Allowance.
ii.) City Compensatory Allowance.
iii.) Fixed Medical Allowance.
iv.) Tiffin Allowance.
v.) Servant Allowance.
vi.) Non Practicing Allowance.
vii.) Hill Allowance.
viii) Warden Allowance and Proctor Allowance.
ix) Deputation Allowance.
x) Overtime Allowance.
xi) Other Allowance.

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i.) House Rent Allowance.(HRA)
ii) Entertainment Allowance.
iii) Special Allowance for meeting certain expenditure.

0

i.) Foreign Allowance.

ii) Sumptuary Allowance to High Court or Supreme Court Judges.
iii) Allowance from U.N.O.
iv) Per-diem Allowance.

0

House Rent Allowance is provided by an employer to his employee to meet rental expenditure of residential accommodation occupied by the employee. It is exempted upto a certain limit.

0

No. To get an exemption, employees need to have rental accommodation or full HRA becomes taxable allowance.

0

Least of the following
i.) HRA actually received.
ii.) Actual Rent Paid minus 10% of your basic salary.
iii.) If your rental accommodation is in Metro City(Only Delhi, Mumbai, Kolkata, Chennai) then 50% of Basic Salary or 40% for the rest of India.

0

Dearness allowance is paid to Govt. Employees in order to cope-up with rising price levels.

0

Apart from Salary any personal non cash benefit or advantage attached to an office or position, which is measured in terms of money.

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i.) Value of any rent free accommodation or any concession in rent provided by the employer.
ii.) Any amount paid by the employer on behalf of his employee.
iii) Any amount paid by the employer indirectly towards any fund other phan PF, Superannuation fund, Deposit linked insurance Fund or Insurance on the life of the employee.
iv) Value of any Sweat Equity shares transferred free of cost or at a concessional rate.
v) Any contribution in the SuperAnnuation Fund eg NPS, exceeding 7.5 lakh in previous year.
vi) Value of any fringe benefit or facility.

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