What is Salary Income?

The compensation given by the employer to the employees for the services provided during a specific time period is known as a salary. It is paid at regular intervals, or one-twelfth of the yearly income is paid each month.

Dictionary definition:- Usually a source of income or profit is given to an employee by their employer. This typically takes the shape of an additional incentive on top of the usual salary. An employee is entitled to receive this sum of money, known as a salary, in exchange for providing services to the employer. According to the rules of the Income Tax Department, pay is defined as the value of a rented space provided by an employer to an employee under Section 17(2) of the Income Tax Act of 1961. Get tax exemption available under section 80c.

An article about 80g income tax.

1. Salary consists of:-

(a) Basic Salary or the set portion of salary as specified in the employment contract.

(b) The employer's fees, commissions, and bonuses;

(c) The allowances the employee receives from the company to cover personal costs. Allotments are either totally, partly, or not taxed at all.

2. The following allowances are fully taxable:-

(a) Dearness allowance, which is given to workers to cover inflation-related costs.

(b) City Compensatory Allowance, which is given to those who relocate to major metropolises with better standards of living, such as Mumbai, Delhi, and Chennai.

(c) The payment of an overtime allowance to an employee who works longer than the allotted hours.

(b) The servant allowance and deputation allowance.

3. The following benefits are partially taxable:-

(a) House Rent Allowance, which is totally taxable if the employee lives in his own home.

(b) The actual monthly housing allowance

(c) If he spends more than 10% of his salary on rent

(d) If the rent equals 50% of his wage (metros) or 40% of his salary (other areas).

(e) Amount for entertainment (except for Central and State Government employees).

(f) Special stipends for things like uniforms, travel, research, etc.

(g) A special stipend to cover personal expenditures, such as a stipend for children's lodging or schooling.

 4. The following expenses are fully exempt:-

(a) Foreign allowances for personnel posted overseas.

(b) Judges of the High Court and Supreme Court's allowances.

(c) Benefits provided to workers of the UN.

Know more about 12a registration.