The meaning of salary under section income tax 17(1) of the Income Tax Act, 1961 is a comprehensive one and includes all forms of remuneration paid by an employer to an employee for services rendered. It includes the following:

• Wages: A sum of money paid under income tax contract by the employer to the employees for services rendered.
• Any annuity or pension: A regular payment made to a person, usually after retirement, as a reward for past services.
• Any gratuity: A sum of money paid by income tax an employer to an employee on retirement, death, or disablement.
• Any fees, commission, perquisites or profits in lieu of or in addition to any salary or wages: This includes payments made to an income tax employee for specific services rendered, such as fees for legal advice or commission on sales. It also includes benefits provided by the employer to the employee, such as the use of a company car or free medical treatment.
• Any advance of salary: Any amount of income tax salary paid to an employee in advance of the time when it is actually due.
• Any payment received by an employee in respect of any period of leave not availed of by him: This includes the payment of leave salary or the encashment of leave.

It is important to note that the definition of salary under section income tax 17(1) is not exhaustive and there may be other payments that are also considered salary for income tax purposes.

Here are some examples of payments that are not considered salary under section incometax17(1):

• Payments made to an independent contractor: An independent contractor of income tax is someone who is self-employed and is not an employee of the person making the payment. Payments made to an independent contractor are not considered salary for income tax purposes.
• Reimbursement of expenses: An employer may reimburse an income tax employee for expenses incurred in the course of employment. Such reimbursements are not considered salary for income tax purposes.
• Gifts: An employer may give an employee income tax a gift. Such gifts are not considered salary for income tax purposes

FAQ QUESTIONS

What is salary under section incometax17(1)?

Salary under section 17(1) of the Income Tax Act is defined as all remuneration, whether by way of salary, wages, commission, bonus, gratuity, or by way of any other payment, by whatever name called, paid or payable to an employee for services rendered by him to his employer.

• What are the different components of salary under income tax?

The different components of salary include:

* Basic salary

* Dearness allowance

* House rent allowance

* Medical allowance

* Transport allowance

* Leave salary

* Bonus

* Commission

* Gratuity

* Perquisites

• Are all the components of salary taxable?

No, not all the components of income tax salary are taxable. Some of the components, such as leave salary and gratuity, are exempt from tax. The taxability of other components, such as house rent allowance and medical allowance, depends on certain conditions.

• What are perquisites?

Perquisites are any benefits or privileges under income tax provided to an employee in addition to his salary or wages. Perquisites are taxable under the head “Salaries”.

• How are perquisites valued?

The value of perquisites is determined by the Income Tax Act or by any rules or regulations made by the government. The value of some common perquisites, such as free housing, medical facilities, and transport facilities, is specified in the Income Tax Act.

• What are the deductions that can be claimed from salary income tax?

There are a number of deductions income tax that can be claimed from salary. Some of the common deductions include:

* Standard deduction

* Medical insurance premium

* Provident fund contribution

* Life insurance premium

* Interest on education loan

* Donations to charitable organizations

• What are the tax implications of salary income tax?

The tax implications of salary under income tax depend on a number of factors, such as the amount of salary, the deductions that are claimed, and the slab rate of the taxpayer. The taxpayer’s total income, including salary, is taxed at progressive rates.

CASE LAWS

• Income Tax Officer v. Dr S. Natarajan (1964): In this case, the Supreme Court held that the definition of salary under Section  income tax 17(1) is comprehensive and covers all payments made by an employer to an employee in connection with his employment, whether or not they are in the nature of wages.
• CIT v. Mafatlal Industries Ltd. (1980): In this case, the Supreme Court held under income tax that the term “salary” includes payments made by an employer to an employee for the purpose of enabling him to meet his personal expenses, such as house rent allowance, medical allowance, and leave travel allowance.
• CIT v. The Managing Director, Indian Airlines (1984): In this case, the Supreme Court held that the  “salary” includes payments made by an employer to an employee in lieu of the value of any benefit or amenity provided to him by the employer, such as the use of a company car or the payment of club membership fees.
• CIT v. The Secretary, Ministry of Railways (1997): In this case, the Supreme Court held that the term “salary” income tax includes payments made by an employer to an employee in the form of a pension or gratuity.
• CIT v. The Managing Director, Bharat Heavy Electricals Ltd. (2002): In this case, the Supreme Court held that the term “salary” includes payments made by an employee