LECTURE - 8

Computation of income under the head salaries

Learning Outcomes

Recognize the features of

taxable salary income
Silent crisis' looms as US to end COVID aid
for millions of jobless
CASE From last lecture…..!!!!
?????
Issue – Residential Status of A and B during the year 2020-21 and incidence
of tax.

Relevant Act – Section 6(1), residential status and incidence of tax.

Analysis – Mr. A has been in India for only 31 Days, therefore he does not
qualifies either of the condition (i) or (ii) (mentioned in next slide) Hence, he is non-
resident. Mr. B also left India one week before Mr. A, hence he is also a non-
resident.
The Income is neither received in India nor earned in India

Conclusion – The interest is received by non – resident outside India (in

New York), hence is not subject to tax in India.
Let’s start with today’s topic
Poll Time:
How many
heads of
income are
there in Income
Tax?

A) 3
B) 5
C) 7
D) 6
Salary House Property Capital Gain

Business/Profession Other Sources

 Employer – Employee
Relationship

Fulltime/Parttime
Concepts
employment

Forgoing of Salary

Surrender of Salary

Place of accrual
 Employer – Employee
Relationship

Fulltime/Parttime
Concepts

employment

Forgoing of Salary

Surrender of Salary

Place of accrual
 Employer – Employee
Relationship

Fulltime/Parttime
Concepts

employment

Forgoing of Salary

Surrender of Salary

Place of accrual
 Employer – Employee
Relationship

Fulltime/Parttime
Concepts

employment

Forgoing of Salary

Surrender of Salary

Place of accrual
 Employer – Employee
Relationship

Fulltime/Parttime
Concepts

employment

Forgoing of Salary

Surrender of Salary

Place of accrual
 Employer – Employee
Relationship

Fulltime/Parttime
Concepts

employment

Forgoing of Salary

Surrender of Salary

Place of accrual
 Employer – Employee
Relationship

Fulltime/Parttime
Concepts

employment

Forgoing of Salary

Surrender of Salary

Place of accrual
 Employer – Employee
Relationship

Fulltime/Parttime
Concepts

employment

Forgoing of Salary

Surrender of Salary

Place of accrual
 Employer – Employee
Relationship

Fulltime/Parttime
Concepts

employment

Forgoing of Salary

Surrender of Salary

Place of accrual
 Employer – Employee
Relationship

Fulltime/Parttime
Concepts

employment

Forgoing of Salary

Surrender of Salary

Place of accrual
 Employer – Employee
Relationship

Fulltime/Parttime
Concepts

employment

Forgoing of Salary

Surrender of Salary

Place of accrual
 Employer – Employee
Relationship

Fulltime/Parttime
Concepts

employment

Forgoing of Salary

Surrender of Salary

Place of accrual
 Employer – Employee
Relationship

Fulltime/Parttime
Concepts

employment

Forgoing of Salary

Surrender of Salary

Place of accrual
Let’s Solve a
question….
Q2) Mr. Vivek passed his MBA Examination on 15 th June
2020 and joined his first job on 15 th July @ Rs 40,000. Find
his salary for A.Y. 2021-22, if Salary is due on last day of
the month

A) 3,20,000

B) 3,00,000

C) 3,40,000

D) 3,60,000
Q2) Mr. Vivek passed his MBA Examination on 15 th June
2020 and joined his first job on 15 th July @ Rs 40,000. Find
his salary for A.Y. 2021-22, if Salary is due on last day of
the month

A) 3,20,000

B) 3,00,000

C) 3,40,000

D) 3,60,000
 Salary

Profits in lieu
Wages Allowances Perquisites
of salary

Less

Standard Entertainment Tax on

deduction allowance Employment
(2) Allowances

Allowances

Fully Partially
Fully Taxable
Exempted Taxable
Fully Exempted

Foreign Allowance (for govt employees posted outside India0

House Rent Allowance (given to judges of High court and Supreme court)

Sumptuary Allowance

Allowances from UNO

Allowances to teacher or professor from SARC member states

Poll Time
Q3) Mr. Harry, a judge in Supreme court is receiving House
Rent Allowance of Rs 10,000 pm from the government of
India. Comment upon its taxability

A) Fully Taxable

B) Fully Exempted

C) Taxable upto 50%

D) None of these is correct

Q3) Mr. Harry, a judge in Supreme court is receiving House
Rent Allowance of Rs 10,000 pm from the government of
India. Comment upon its taxability

A) Fully Taxable

B) Fully Exempted

C) Taxable upto 50%

D) None of these is correct

Fully Taxable

Dearness Allowance

City compensatory Allowance

Lunch/Tiffin Allowance

Marriage/Family Allowance
Fully Taxable

Deputation Allowance

Wardenship Allowance

Non practising Allowance

Project Allowance
Fully Taxable

Overtime Allowance

Fixed Medical Allowance

Entertainment Allowance for non government Employees

Project Allowance
Poll Time
Q4) Miss Neha, is receiving Dearness Allowance of Rs
10,000 pm. Comment upon its taxability

A) Fully Taxable

B) Fully Exempted

C) Taxable upto 50%

D) None of these is correct

Q4) Miss Neha, is receiving Dearness Allowance of Rs
10,000 pm. Comment upon its taxability

A) Fully Taxable

B) Fully Exempted

C) Taxable upto 50%

D) None of these is correct

Partially Taxable Allownace
1) House Rent Allowance
Now you Solve a
question….
Q5) Mr. Hari is employed at Amritsar on a salary of Rs 30,000 pm.
The employer is paying HRA of Rs 8,000 pm, but the actual rent
paid by him is Rs 12,000 pm. He is also getting 2% commission on
turnover achieved by him and the turnover is Rs 50,00,000.
Calculate his Taxable HRA.

A) 3,60,000

B) 1,00,000

C) 96,000

D) Nil
Q5) Mr. Hari is employed at Amritsar on a salary of Rs 30,000 pm.
The employer is paying HRA of Rs 8,000 pm, but the actual rent
paid by him is Rs 12,000 pm. He is also getting 2% commission on
turnover achieved by him and the turnover is Rs 50,00,000.
Calculate his Taxable HRA.

A) 3,60,000

B) 1,00,000

C) 96,000

D) Nil
Partially Taxable Allownace

2) Official Allowance (exempted upto actual amount spent)

• Helper Allowance
• Uniform Allowance
• Academic Research Allowance
• Conveyance Allowance
• Travelling Allowance
• Daily Allowance
Partially Taxable Allownace

3) Personal Allowance (exempted upto certain limit)

• Transport Allowance for handicapped employees
(@3200 pm)
• Children Education Allowance (@100 pm per child for
maximum 2 children)
• Hostel Expenditure Allowance (@300 pm per child for
maximum 2 children0