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IAI Actuarial Core Principles · Business Finance · Personal and corporate taxation

Which of the following is a feature of tax on salary income for a resident individual in India?

Employers deduct tax at source from salary, based on the employee's estimated income for the year. Salary is taxed at progressive slab rates, so a flat rate or exemption for company employers does not apply.

  1. ATax is deducted at source by the employer based on estimated incomeCorrect
  2. BSalary is taxed only when it is received in cash in India
  3. CSalary is taxed at a flat rate regardless of amount
  4. DSalary is exempt if paid by a company
  5. Employer deducts tax only at the end of the year

Explanation

Employers must deduct tax at source from salary, based on estimated annual income for the individual. Salary is taxed at slab rates, not a flat rate, and is not exempt because the employer is a company. Deduction is spread through the year, not only at the end.

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