Salary is chargeable to tax on
Adue basis only, in every case
Bdue or receipt basis, whichever is earlier
Creceipt basis only, in every case
Ddue or receipt basis, whichever is later
Answer & Solution
Correct answer: B. due or receipt basis, whichever is earlier
1. Salary can fall due in one year and be received in another.
2. The rule fixes which of the two events triggers the charge.
3. Salary is chargeable to tax either on due basis or on receipt basis, whichever is earlier.
4. Choosing the later of the two would let tax be deferred simply by delaying payment.
_Source: ICAI Income Tax Law, Ch3 'Heads of Income', Unit 1 'Salaries', section 1.2_
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