FAQ's of Salary Income and Tax Liability.
Q1. When arrears of salary pertaining earlier years are received in one year, what is the relief available to the assessee?
Ans : The arrears of salary are to be taxed in the year of receipt along with the regular salary. However, the employee will be entitled to certain relief under section 89(1) as computed in accordance with Rule 21A.
Q2. Can the employer take into account the relief admissible under section 89(1) while deducting tax at source from salary?
Ans : Yes, in respect of Govt. servants or employees in a company, co-operative society, local authority, university, institution, associations or body, the employer may take into account the relief admissible under section 89(1) provided the employee furnishes the particulars in form No.10E to the employer.
Q3. If an employee has also income from other sources apart from salary, can the employer take these into account while deducting tax from salary?
Ans : Yes, if the employee furnishes the required particulars in form No.12C to the employer. This is subject to the condition that the income under any of the other heads except 'Income from House Property' is not a loss. If the employee has incurred a loss under the head 'Income from House Property', he may furnish details thereof to the employer in form No.12C and the employer may then take into account the said loss while deducting tax from salary.
Q4. Is pension treated as salary ?
Ans : Yes, pension is also treated as salary and is accordingly entitled to the standard deduction.
Q5. Is family pension also treated as salary?
Ans : No. As there is no employer-employee relationship between the recipient of the family pension and the payer, family pension is not salary. It is taxed under the head 'Income from Other Sources'. In respect of family pension received from the employer by a person belonging to the family of the employee in the event of the employee's death, a standard deduction of 1/3rd of the family pension or Rs.15,000 whichever is less is allowed as a deduction.
Q1. When arrears of salary pertaining earlier years are received in one year, what is the relief available to the assessee?
Ans : The arrears of salary are to be taxed in the year of receipt along with the regular salary. However, the employee will be entitled to certain relief under section 89(1) as computed in accordance with Rule 21A.
Q2. Can the employer take into account the relief admissible under section 89(1) while deducting tax at source from salary?
Ans : Yes, in respect of Govt. servants or employees in a company, co-operative society, local authority, university, institution, associations or body, the employer may take into account the relief admissible under section 89(1) provided the employee furnishes the particulars in form No.10E to the employer.
Q3. If an employee has also income from other sources apart from salary, can the employer take these into account while deducting tax from salary?
Ans : Yes, if the employee furnishes the required particulars in form No.12C to the employer. This is subject to the condition that the income under any of the other heads except 'Income from House Property' is not a loss. If the employee has incurred a loss under the head 'Income from House Property', he may furnish details thereof to the employer in form No.12C and the employer may then take into account the said loss while deducting tax from salary.
Q4. Is pension treated as salary ?
Ans : Yes, pension is also treated as salary and is accordingly entitled to the standard deduction.
Q5. Is family pension also treated as salary?
Ans : No. As there is no employer-employee relationship between the recipient of the family pension and the payer, family pension is not salary. It is taxed under the head 'Income from Other Sources'. In respect of family pension received from the employer by a person belonging to the family of the employee in the event of the employee's death, a standard deduction of 1/3rd of the family pension or Rs.15,000 whichever is less is allowed as a deduction.
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