Salary Income

Salary Income refers to income received by an individual from an employer in return for services rendered under an employment relationship. It is taxed under the head “Income from Salary” in the Income Tax Act.

This includes not just basic salary, but various allowances, perquisites, and benefits.

1. Components of Salary

Salary income typically includes:

• Basic salary
• Dearness allowance (DA)
• House Rent Allowance (HRA)
• Leave Travel Allowance (LTA)
• Bonus and commissions
• Perquisites (car, accommodation, etc.)

All components together form total salary.

2. Taxability of Salary

• Salary is taxable on due or receipt basis, whichever is earlier
• Fully taxable unless specifically exempt
• Certain allowances and benefits may have partial exemptions

3. Deductions from Salary

Common deductions include:

• Standard Deduction (₹50,000 or as applicable)
• Professional tax (if paid)
• Certain exemptions (like HRA, subject to conditions)

These reduce taxable salary income.

4. Perquisites

Perquisites are additional benefits provided by employer:

• Rent-free accommodation
• Company car
• Interest-free loans

These are taxable based on prescribed valuation rules.

5. TDS on Salary

• Employer deducts Tax Deducted at Source (TDS) before paying salary
• Based on estimated annual income
• Reflected in Form 16 and Form 26AS

6. Common Mistakes

• Not declaring all allowances
• Ignoring perquisite taxation
• Not submitting investment proofs to employer
• Assuming TDS deducted = final tax liability

Practical Insight

Most salaried people think:

“TDS is deducted, so I’m sorted.”

Not always.

Because:

• employer estimates tax
• actual tax depends on full-year income

So final adjustment happens at ITR stage.

How N D Savla & Associates Can Help

At N D Savla & Associates, we help you:

• Structure salary for tax efficiency
• Maximise exemptions and deductions
• Verify TDS and Form 16 accuracy
• Ensure correct ITR filing