In the computation of income under the head Salaries, gross salary is the total of
Asalary and standard deduction only
Bsalary, taxable allowances and perquisites
Callowances and professional tax only
Dperquisites and section 16 deductions
Answer & Solution
Correct answer: B. salary, taxable allowances and perquisites
1. The computation builds gross salary first, then applies deductions.
2. Gross salary is salary, bonus and commission, plus taxable allowances, plus the value of taxable perquisites.
3. The deductions under section 16 are then subtracted from that gross figure.
4. Treating a deduction as part of gross salary would double count it.
_Source: ICAI Income Tax Law, Ch3 'Heads of Income', Unit 1 'Salaries', section 1.4_
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