Section 17 ITA 1961 defines 'SALARY' for purposes of taxation. It includes:
ASalary, perquisites, profits in lieu of salary; allowances; commissions; bonuses; gratuities; pensions; fees received during employment
Bonly basic salary (cf. Income Tax Act 1961, Section 17) (cf. Income Tax Act 1961, Section 17) (cf. Income Tax Act 1961, Section 17)
Conly allowances (cf. Income Tax Act 1961, Section 17) (cf. Income Tax Act 1961, Section 17) (cf. Income Tax Act 1961, Section 17)
Donly bonuses (cf. Income Tax Act 1961, Section 17) (cf. Income Tax Act 1961, Section 17) (cf. Income Tax Act 1961, Section 17)
Answer & Solution
Correct answer: A. Salary, perquisites, profits in lieu of salary; allowances; commissions; bonuses; gratuities; pensions; fees received during employment
1. Section 17(1) Income Tax Act 1961 defines 'SALARY' broadly to include: (i) wages; (ii) annuity or pension; (iii) gratuity; (iv) fees, commissions, perquisites or profits in lieu of or in addition to any salary; (v) advance of salary; (vi) leave salary; (vii) annual accretion to PF (taxable portion); (viii) transferred balance in PF; (ix) contributions to NPS.
2. Section 17(2) defines PERQUISITES: rent-free accommodation, concessional rent, free services, etc.
3. Section 17(3) defines PROFITS in lieu of salary.
4. Hence option B is correct.
_Source: CS Executive Paper 4 Tax Laws (ICSI BoS) + Income Tax Act 1961 + CGST Act 2017 — Income Tax Act 1961, Section 17_
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