Definition of Salary :

The term ‘salary‘ has been defined differently for different purposes in the Act. The definition as to what constitutes salary is very wide. As already discussed earlier, it is an inclusive definition and includes monetary as well as non-monetary items. There are different definitions of ‘salary‘ say for calculating exemption in respect of gratuity, house rent allowance etc. ‘Salary‘ under section 17(1), includes the following:

(i) wages,

(ii) any annuity or pension,

(iii) any gratuity,

(iv) any fees, commission, perquisite or profits in lieu of or in addition to any salary or wages,

(v) any advance of salary,

(vi) any payment received in respect of any period of leave not availed by him i.e. leave salary or leave encashment,

(vii) the portion of the annual accretion in any previous year to the balance at the credit of an employee participating in a recognised provident fund to the extent it is taxable and

(viii) transferred balance in recognized provident fund to the extent it is taxable,

(ix) 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.