Ever wondered why your salary is taxed even before it hits your bank account? That's Section 15 in action. It defines when salary becomes taxable — and the answer might surprise you: it doesn't have to be paid to be taxed.
Section 15 says salary is taxable under the head "Salaries" in three situations. First, salary due — if your employer owes you ₹80,000 for March 2025 but pays it in April, it's still taxable in the Previous Year 2024-25 because it became due in March. Second, salary paid in advance — if Mr. Sharma's company pays him his April salary in March itself (before it's due), that advance gets taxed in March's previous year, not April's. Third, arrears of salary — if Ms. Iyer gets ₹1,20,000 as pending salary from 3 years ago that was never taxed before, it's taxable now, in the year she receives it. The key guard here is the phrase "if not charged to income-tax for any earlier previous year" — arrears are taxed only once, never twice.
The big idea behind this section is the concept of "due basis vs. receipt basis". Salary follows the earlier of due or receipt rule. Whichever happens first — the employer owing it to you, or actually paying it — that's when it gets taxed. This is different from house property or other heads which may follow pure receipt basis. For exam purposes, this section is the gateway to the entire Salaries chapter, and a 2–4 mark theory or application question on the taxability of advance salary or arrears appears very regularly. Knowing all three clauses (a), (b), and (c) with a clean example is your ticket to full marks.