Income from Employment Flashcards
What amounts are excluded while computing income from employment under Sec. 8(3)?
Amounts exempt from tax (e.g., Ambassador’s salary, foreign army pension).
Amounts subject to final withholding (e.g., retirement payment).
Reimbursements for employer’s business expenses (e.g., office travel, meal refreshment).
Payments up to Rs. 500 for tea, stationery, emergency medical treatment, tips, or rewards at a time.
What types of payments are included in income from employment?
Payments from past, present, or future employers and associated persons.
Payments by third parties under agreements with the employer.
How is income from employment accounted for?
Cash basis for regular payments (e.g., advance salary, leave payable).
Accrual basis for lump sum amounts from past employment after case settlement.
How is house accommodation provided by an employer quantified?
For employees: 2% of (Basic Salary + Grade).
For consultants/others: 25% of rent paid or prevailing rent.
What expenses are not included in house accommodation?
Security guard’s facility.
Cook’s facility.
WiFi/telephone facility.
How is a concessional loan facility treated for tax purposes?
The saving in interest is included in taxable income.
How are employer-paid insurance premiums treated for tax purposes?
Included in the employee’s income.
Deduction allowed only for the premium paid of the employee.
How is Traveling & Daily Allowance (TADA) treated for tax purposes?
Not included in income since it covers official travel expenses.
How is the transfer of ownership of assets treated for tax purposes?
The market value of the asset is included in employment income.
How is vehicle facility provided by an employer quantified?
Employer to employee: 0.5% of (Basic Salary + Grade).
Other person: 1% per annum of market value.
What is included in vehicle facility?
Driver’s Salary
Fuel and Maintenance, etc
