## Charging Section – Income from Salary

### When is income taxable under 'Salary'?

Income falls under the head Salary only when there exists an Employer–Employee relationship between the payer and the receiver. If this relationship is absent, the receipt is taxed under another head (PGBP, IFOS, etc.).

### Basis of Taxability

Salary is taxable on the basis of due or receipt, whichever is earlier.

If salary becomes due in March but is received in April → taxable in the year it became due.
If salary is received in advance before it becomes due → taxable in the year of receipt.

### Special Situations – Quick Reference

Nature of Receipt	Head of Income
Income from part-time job (with employer relationship)	Salary
Joining bonus received before joining job	Salary
Pension received after leaving job	Salary
Salary received by partner from partnership firm	PGBP (no employer-employee relation)
Salary received by MP / MLA	IFOS

### Surrender / Forgoing of Salary

Surrender of salary to	Treatment
Central Government	Not Taxable
Any other person	Taxable under Salary

> Key idea: Once salary becomes due/received, it has already accrued to the employee. Application of income (giving it to someone else) does not make it non-taxable; only surrender to the Central Government enjoys the exemption.

Worked example

### Example 1

Example: Mr. A's salary of ₹50,000 for March 2025 was credited on 5 April 2025. → Taxable in PY 2024-25 (due basis is earlier).

### Example 2

Example: Mr. B received ₹1,00,000 as joining bonus before joining XYZ Ltd. → Fully taxable as Salary, even though not yet an employee on date of receipt.

### Example 3

Example: Mr. C, a partner in a firm, draws monthly remuneration of ₹40,000. → Taxable under PGBP, not Salary.

⚠️ Common exam mistakes

Treating MP/MLA salary as 'Salary' – taxable under IFOS because they hold a constitutional post, not an employment.
Taxing salary twice – once on due basis and again on receipt basis. Tax only when earlier of the two events occurs.
Treating a partner's remuneration from a firm as Salary – it is always PGBP.
Assuming all surrender of salary is exempt – exemption applies only when surrendered to the Central Government.

Bare-Act text Section 15 · Income-tax Act, 1961 · click to expand

Section 15 – The following income shall be chargeable to income-tax under the head 'Salaries' — (a) any salary due from an employer or a former employer to an assessee in the previous year, whether paid or not; (b) any salary paid or allowed to him in the previous year by or on behalf of an employer or a former employer though not due or before it became due to him; (c) any arrears of salary paid or allowed to him in the previous year by or on behalf of an employer or a former employer, if not charged to income-tax for any earlier previous year.

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Charging Section & Basis of Charge

Worked example

⚠️ Common exam mistakes