वेतन, विशेषाधिकार और परिभाषित वेतन के एवज में मुनाफे
"Salary", "perquisite" and "profits in lieu of salary" defined.
( 1) "salary" includes—
( i) wages;
( ii) any annuity or pension;
( iii) any gratuity;
( iv) any fees, commissions, perquisites or profits in lieu of or in addition to any salary or wages;
( v) any advance of salary;
72 [(va)any payment received by an employee in respect of any period of leave not availed of by him;]
( vi) the annual accretion to the balance at the credit of an employee participating in a recognised provident fund, to the extent to which it is chargeable to tax under rule 6 of Part A of the Fourth Schedule; and
( vii) the aggregate of all sums that are comprised in the transferred balance as referred to in sub-rule (2) of rule 11 of Part A of the Fourth Schedule of an employee participating in a recognised provident fund, to the extent to which it is chargeable to tax under sub-rule (4) thereof;
( ii) the value of any concession in the matter of rent respecting any accommodation provided to the assessee by his employer;
( iii) the value of any benefit or amenity granted or provided free of cost or at concessional rate in any of the following cases:—
( a) by a company to an employee who is a director thereof;
( b) by a company to an employee being a person who has a substantial interest in the company;
( c) by any employer (including a company) to an employee to whom the provisions of paragraphs (a) and (b) of this sub-clause do not apply and whose income 75[under the head "Salaries" (whether due from, or paid or allowed by, one or more employers), exclusive of the value of all benefits or amenities not provided for by way of monetary payment, exceeds twenty-four thousand rupees.]
76 [Explanation.—For the removal of doubts, it is hereby declared that the use of any vehicle provided by a company or an employer for journey by the assessee from his residence to his office or other place of work, or from such office or place to his residence, shall not be regarded as a benefit or amenity granted or provided to him free of cost or at concessional rate for the purposes of this sub-clause;]
( iv) any sum paid by the employer in respect of any obligation which, but for such payment, would have been payable by the assessee; and
( v) any sum payable by the employer, whether directly or through a fund, other than a recognised provident fund or an approved superannuation fund 77 [or a Deposit-linked Insurance Fund established under section 3G of the Coal Mines Provident Fund and Miscellaneous Provisions Act, 1948 (46 of 1948), or, as the case may be, section 6C of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (19 of 1952)], to effect an assurance on the life of the assessee or to effect a contract for an annuity :
( i) the value of any medical treatment provided to an employee or any member of his family in any hospital maintained by the employer;
79[( ii) any sum paid by the employer in respect of any expenditure actually incurred by the employee on his medical treatment or treatment of any member of his family—
( a) in any hospital maintained by the Government or any local authority or any other hospital approved 80 by the Government for the purposes of medical treatment of its employees;
( b) in respect of the prescribed diseases 81 or ailments, in any hospital approved by the Chief Commissioner having regard to the prescribed guidelines 82 :
Provided that, in a case falling in sub-clause (b), the employee shall attach with his return of income a certificate from the hospital specifying the disease or ailment for which medical treatment was required and the receipt for the amount paid to the hospital;]
( iii) any portion of the premium paid by an employer in relation to an employee, to effect or to keep in force an insurance on the health of such employee under any scheme approved by the Central Government for the purposes of clause (ib) of sub-section (1) of section 36;
( iv) any sum paid by the employer in respect of any premium paid by the employee to effect or to keep in force an insurance on his health or the health of any member of his family under any scheme approved by the Central Government for the purposes of section 80D;
( v) any sum paid by the employer in respect of any expenditure actually incurred by the employee on his medical treatment or treatment of any member of his family [other than the treatment referred to in clauses (i) and (ii)]; so, however, that such sum does not exceed ten thousand rupees in the previous year;
( vi) any expenditure incurred by the employer on—
( 1) medical treatment of the employee, or any member of the family of such employee, outside India;
( 2) travel 83 [and] stay abroad of the employee or any member of the family of such employee for medical treatment;
( 3) travel and stay abroad of one attendant who accompanies the patient in connection with such treatment,
84 [subject to the condition that—
( A) the expenditure on medical treatment and stay abroad shall be excluded from perquisite only to the extent permitted by the Reserve Bank of India; and
( B) the expenditure on travel shall be excluded from perquisite only in the case of an employee whose gross total income, as computed before including therein the said expenditure, does not exceed two lakh rupees;]
( vii) any sum paid by the employer in respect of any expenditure actually incurred by the employee for any of the purposes specified in clause (vi) subject to the conditions specified in or under that clause.
Explanation.—For the purposes of clause (2),—
( ii) "family", in relation to an individual, shall have the same meaning as in clause (5) of section 10; and
( iii) "gross total income" shall have the same meaning as in clause (5) of section 80B;]
86 [***]
( i) the amount of any compensation due to or received by an assessee from his employer or former employer at or in connection with the termination of his employment or the modification of the terms and conditions relating thereto;
( ii) any payment (other than any payment referred to in clause (10) 88[, clause (10A)] 89[, clause (10B)], clause (11), 90 [clause (12) 91[, clause (13)] or clause (13A)] of section 10), due to or received by an assessee from an employer or a former employer or from a provident or other fund 92[***], to the extent to which it does not consist of contributions by the assessee or 93[interest on such contributions or any sum received under a Keyman insurance policy including the sum allocated by way of bonus on such policy.
Explanation.—For the purposes of this sub-clause, the expression "Keyman insurance policy" shall have the meaning assigned to it in clause (10D) of section 10.]
94 [***]
70. See also Circular No. 150, dated 19-11-1974, Circular No. 130, dated 16-3-1974, Circular No. 374, dated 14-12-1983, Instruction No. 1145/1146 [F. No. 200/9/78-IT (A-I)], dated 27-1-1978, Letter : F.No. 35/50/65-IT(B), dated 27-4-1966, Circular No. 5, dated 6-9-1950, Circular No. 311, dated 24-8-1981, Circular No. 41(LVIII-2), dated 27-10-1956, Letter : F. No. 35/7/65-IT(B), dated 12-2-1965, Circular No. 122, dated 19-10-1973, Instruction No. 1145 [F. No. 200/6/78-IT (A-I)], dated 27-1-1978, Para I of Instruction No. 133, dated 10-2-1969, Circular No. 603, dated 6-6-1991, Circular No. 662, dated 27-9-1993, Circular No. 710, dated 24-7-1995, Circular No. 708, dated 18-1-1995, as amended by Circular No. 727, dated 27-10-1995. For details, see Taxmann’s Master Guide to Income-tax Act.
71. For relevant case laws, see Taxmann’s Master Guide to Income-tax Act.
72. Inserted by the Taxation Laws (Amendment) Act, 1984, with retrospective effect from 1-4-1978.
73. See rule 3 for ‘Valuation of perquisites’. See also Appendix Two for an analysis of rule 3.
74. In terms of section 10A of the Salaries and Allowances of Ministers Act, 1952/Salaries and Allowances of Officers of Parliament Act, 1953 and section 9A of the Salaries and Allowances of Leaders of Opposition in Parliament Act, 1977, value of rent-free furnished residence (including maintenance thereof) provided to a minister/an officer of Parliament and a Leader of the Opposition is not to be included in the computation of his income chargeable to tax under the head "Salaries".
75. Substituted for ‘under the head "Salaries", exclusive of the value of all benefits or amenities not provided for by way of monetary payment, exceeds eighteen thousand rupees;’ by the Finance Act, 1985, w.e.f. 1-4-1986.
76. Inserted by the Finance Act, 1989, w.e.f. 1-4-1990.
77. Inserted by the Labour Provident Fund Laws (Amendment) Act, 1976, w.e.f. 1-8-1976.
78. Inserted by the Finance (No. 2) Act, 1991, w.e.f. 1-4-1991.
80. For list of hospitals recognised under the Central Government Health Scheme vide Circular No. 603, dated 6-6-1991, see Taxmann’s Master Guide to Income-tax Act.
81. See rule 3A(2) for prescribed diseases.
82. See rule 3A(1) for conditions to be fulfilled by a hospital to obtain Chief Commissioner’s approval.
83. Substituted for "or" by the Finance Act, 1993, w.e.f. 1-4-1993.
84. Substituted, ibid. Prior to substitution, the portion beginning with "subject to the condition" and ending with "Reserve Bank of India in this behalf, prescribe", as amended by the Finance Act, 1992, w.e.f. 1-4-1993, read as under :
"subject to the condition that the expenditure on travel referred to in sub-clauses (2) and (3 ) of this clause shall be excluded from perquisite only in the case of an employee whose gross total income, as computed before including therein the said expenditure, does not exceed two lakh rupees and subject to such further conditions and limits in relation to such expenditure as the Board may, having regard to the guidelines, if any, issued by the Reserve Bank of India in this behalf, prescribe;"
85. Inserted by the Finance Act, 1992, w.e.f. 1-4-1993.
86. Sub-clause (vi) along with consequential amendments in sub-clauses (iv) and (v), omitted by the Finance Act, 1985, w.e.f. 1-4-1985. Original sub-clause was inserted by the Taxation Laws (Amendment) Act, 1984, w.e.f. 1-4-1985. Amendment thus never came into operation.
87. See also Letter F. No. 35/26/64-IT(B), dated 25-5-1964. For details, see Taxmann’s Master Guide to Income-tax Act.
88. Inserted by the Finance (No. 2) Act, 1965, with retrospective effect from 1-4-1962.
89. Inserted by the Finance Act, 1975, w.e.f. 1-4-1976.
90. Substituted for "or clause (12)" by the Direct Taxes (Amendment) Act, 1964, w.e.f. 6-10-1964.
91. Inserted by the Finance Act, 1995, w.e.f. 1-4-1996.
92. Words "(not being an approved superannuation fund)" omitted, ibid.
93. Substituted for "interest on such contributions" by the Finance (No. 2) Act, 1996, w.e.f. 1-10-1996.
94. Sub-heading "B.—Interest on securities" and sections 18 to 21 omitted by the Finance Act, 1988, w.e.f. 1-4-1989. Prior to their omission, sub-heading, section 18 (as amended by the Finance Act, 1965, w.e.f. 1-4-1965 and the Finance Act, 1988, w.e.f. 1-4-1988), section 19, section 20 (as amended by the Finance Act, 1979, w.e.f. 1-4-1980) and section 21, read as under:
‘B.—Interest on securities
18. Interest on securities.—(1) The following amounts due to an assessee in the previous year shall be chargeable to income-tax under the head "Interest on securities",—
( i) interest on any security of the Central or State Government;
( ii) interest on debentures or other securities for money issued by or on behalf of a local authority or a company or a corporation established by a Central, State or Provincial Act.
(2) Nothing contained in sub-section (1) shall be construed as precluding an assessee from being charged to income-tax in respect of any interest on securities received by him in a previous year if such interest had not been charged to income-tax for any earlier previous year.
19. Deductions from interest on securities.—Subject to the provisions of section 21, the income chargeable under the head "Interest on securities" shall be computed after making the following deductions—
( i) any reasonable sum expended by the assessee for the purpose of realising such interest;
( ii) any interest payable on money borrowed for the purpose of investment in the securities by the assessee.
20. Deductions from interest on securities in the case of a banking company.—(1) In the case of a banking company—
( i) the sum to be regarded as a sum reasonably expended for the purpose referred to in clause (i) of section 19 shall be an amount bearing to the aggregate of its expenses as are admissible under the provisions of sections 30, 31, 36 and 37 [other than clauses (iii ), (vi), (vii) and (viia) of sub-section (1) of section 36] the same proportion as the gross receipts from interest on securities (inclusive of tax deducted at source) chargeable to income-tax under section 18 bear to the gross receipts of the company from all sources which are included in the profit and loss account of the company;
( ii) the amount to be regarded as interest payable on moneys borrowed for the purpose referred to in clause (ii) of section 19 shall be an amount which bears to the amount of interest payable on all moneys borrowed by the company the same proportion as the gross receipts from interest on securities (inclusive of tax deducted at source) chargeable to income-tax under section 18 bear to the gross receipts from all sources which are included in the profit and loss account of the company.
(2) The expenses deducted under clauses (i) and (ii) of sub-section (1) shall not again form part of the deductions admissible under sections 30 to 37 for the purposes of computing the income of the company under the head "Profits and gains of business or profession".
Explanation. —For the purposes of this section, "moneys borrowed" includes moneys received by way of deposits.
21. Amounts not deductible from interest on securities.—Notwithstanding anything contained in sections 19 and 20, any interest chargeable under this Act which is payable outside India (not being interest on a loan issued for public subscription before the 1st day of April, 1938) on which tax has not been paid or deducted under Chapter XVII-B, and in respect of which there is no person in India who may be treated as an agent under section 163 shall not be deducted in computing the income chargeable under the head "Interest on securities".’