What is sintomasdelsida.org Section 15?
Further Understanding of Section 15 & Section 17: Section 15 basically deals with the head ‘Salary’ which further states that the following income shall be chargeable to income-tax under ‘Salaries’—–
• Any salary due from an employer or a former employer to an assessee in the previous year, whether paid or not.
• Any salary paid or allowed to him in the previous year by or on behalf of an employer or a former employer though not due or before it became due to him.
• Any arrears of salary paid or allowed to him in the previous year by or on behalf of an employer or a former employer, if not charged to income tax for any earlier previous year.
• For the removal of doubts in regards to section 15, Explanations have been inserted in the Act which is explained as follows:
• Explanation 1: This explanation is inserted for the removal of doubts and it is hereby declared that where any salary paid in advance is included in the total income of any person for any previous year it shall not be included again in total income of the person when the salary becomes due.
• Explanation 2: This explanation states that any salary, bonus, commission or remuneration, by whatever name called, due to, or received by, a partner of a firm from the firm shall not be regarded as ‘salary’ for the purposes of this section.
Note : Section 15(c) provides that any arrears of salary paid or allowed to him in the previous year by or on behalf of an employer of a former employer, if not charged to income tax for any earlier previous year, shall be chargeable to income-tax under the head ‘Salaries’.
Elevating or increasing our knowledge even further in regards to the income under the head salaries, it would be well routed if we take the path of Section 17 of the Income Tax Act 1961.
What is Section 17 and what are the Provisions Attached to it?
• In the light of Section 17, we will learn in detail the terms ‘Salary’, ‘Perquisites’ and ‘profits in lieu of salary’
• For the purposes of sections 15 and 16 and of this section 17,
Salary Includes
• Wages
• Any annuity or pension.
• Any gratuity.
• Any fees, commissions, perquisites or profits in lieu of or in addition to any salary or wages.
• Any advance of salary.
• Any payment received by an employee in respect of any period of leave not availed of by him.
• The annual accretion to the balance at the credit of an employee participating in a recognized provident fund, to the extent to which it is chargeable to tax.
• The aggregate of all sums that are comprised in the transferred balance as referred to in the relevant schedule and that of an employee participating in a recognized provident fund, to the extent to which it is chargeable to tax as prescribed in the relevant rule thereof.
• The contribution made by the Central Government or any other employer in the previous year, to the account of an employee under a pension scheme referred to in Section 80CCD, which is a deduction section.
Now as we move ahead in our explanation, we will witness what are items included under the term perquisites.
Perquisites Includes——
• The value of rent-free accommodation provided to the assessee by his employer.
• The value of any concession in the matter of rent respecting any accommodation provided to the assessee by his employer.
• The value of any specified security or sweat equity shares allotted or transferred, directly or indirectly, by the employer, or former employer, free of cost or at a concessional rate to the assessee.
Further in our topic we will learn about the explanations inserted by the Act, to give us a clear picture on some of the perquisites and hence what are these perquisites attract extra provisions or explanations?
• For the purpose of prerequisite being the value of any concession in the matter of rent in respect to any accommodation provided to the assessee by his employer:
• Explanation 1 has been inserted which states that the concession in the matter of rent shall be deemed to have been provided if
• In a case where an unfurnished accommodation is provided by any employer other than the Central Government or any State Government and the accommodation is owned by the employer, the value of the accommodation determined at the specified rate in respect of the period during which the said accommodation was occupied by the assessee during the previous year, exceeds the rent recoverable from, or payable by, the assessee.
• Another explanation is inserted in relation to the prerequisite pertaining to the value of any specified security or sweat share, as mentioned above. For the aforesaid purpose of perquisite, this explanation states the following:
• ‘Specified Security’ means where employees’ stock options have been granted under a plan or scheme therefore, includes the securities offered under such plan or scheme.
• ‘Sweat equity shares’ means equity shares issued by a company to its employees r directors at a discount or for consideration other than cash for providing know-how or making available rights in the nature of intellectual property rights or value additions, by whatever name called.
• The value of any specified security or sweat equity shares shall be the fair market value of the specified security or sweat equity shares, as the case may be, on the date on which the option is exercised by the assessee as reduced by the amount actually paid by, or recovered from, the assessee in respect of such security or shares.