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CS Executive · Tax Laws and Practice · Income under the Head Salary

Under the Income-tax Act, 2025 (applicable from the June 2027 session), which of the following items is expressly listed in section 16 as forming part of 'salary'?

Perquisites are expressly included in 'salary' under section 16 of the Income-tax Act, 2025, along with wages, pension, gratuity, fees, commission and profits in lieu of salary. Dividend and house rent are taxed under other heads, so they are not part of salary.

  1. APerquisitesCorrect
  2. BDividend received from the employer company
  3. CReimbursement of actual travel on official duty
  4. DRent received from letting a house to the employer

Explanation

Section 16 lists wages, annuity or pension, gratuity, fees or commission, perquisites, profits in lieu of salary, advance of salary, leave encashment and certain fund contributions. Perquisites are named expressly. Dividend and rent fall under other heads and are not listed in the definition.

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