The motivation behind this article is to talk about the various kinds of receipts acquired by a citizen, which would be available under the head ‘Pay from Salary’. This article gives a short outline of the assessment treatment of various kinds of pay acquired by a salaried individual.
Components of Salary
The accompanying livelihoods acquired by a citizen during a monetary year are viewed as pay, and consequently available under the head ‘Pay from Salary:
- Wages
- Annuity
- pension
- Gratuity
- Fees, Commission, Perquisites, Profits in lieu of or adding to Salary or Wages
- Advance of Salary
- Leave Encashment
- Bonus
- Salary in lieu of Notice Period
- Fees and Commission
- overtime Payments
Wages
Wages are like compensations. A pay is viewed as a financial remuneration paid by a business to a worker in return for work done. Consequently, compensation are dealt with very much like compensation and are available on a similar premise of pay.
Annuity
An Annuity is a yearly award given by the business that gets arranged under the head of compensations. This is an intentional installment made by the business on an authoritative premise. The annuity is treated as follows:
- At the point when the current manager pays the annuity, it is available as pay.
- On the off chance that it is gotten from a previous manager, it is burdened as benefits rather than compensation.
- In the event that an annuity is allowed by an insurance agency, it is considered as “Pay from Other Sources”
Pension
A pension is a payment made by the business after the retirement/passing of the worker as an award for the past assistance. The payment of benefits is done on a periodical premise or even as a knot, in view of the understanding between the business and the representative. There are two distinct classes under which the annuities are dealt with. They are:
Un-Commuted Pension
This is also called ‘periodical pension’ and it is completely available in the possession of the representatives independent of the source – Governmental or Non-Governmental.
Commuted Pension
On account of government workers, representatives of neighborhood authority and representatives of partnerships it is completely tax-exempt.
Bonus
A bonus is characterized as, “An amount of cash added to an individual’s wages as an award for great execution”. Reward is available dependent on the accompanying:
- The reward is available on receipt premise.
- It will be remembered for the gross compensation in the year the extra was gotten.
Salary in Lieu of Notice Period
The notification period is the time span between the receipt of the letter of excusal and the finish of the last working day. This time-frame must be given to a representative by their manager before their business closes. This salary is totally taxable.
Fees and Commission
A fee is a payment made to an professional individual or to an specialist or public body in return for counsel or administrations. The commission is the payment of commission as compensation for administrations delivered or items sold is a typical method to remunerate salesmen.
- All fees and commission payable to a employee are completely taxable.
- It will be remembered for net compensation.
- Independent of the fixed sum or a fixed rate, a commission is completely available.
Overtime Payment
This payment is given to the representative as a prize for working additional time in the workplace past the specified time. Any payment made as ‘overtime payment’ is totally taxable in the control of the employee. This is additionally remembered for the gross salary.
