Explain the terms –
a. Meaning of salary & items.
b. Provident fund types
c. Kinds of Perquisites
d. Profit in lieu of salary
Answers
Answer:
a)The term salary is defined under section 17 (1) of the income tax act to include following items as salary; Wages. Any annuity or pension. ... The portion of the annual accretion in any previous year to the balance at the credit of an employee participating in a recognized provident fund to the extent it is taxable.
b)Statutory Provident Fund (SPF / GPF) These are maintained by Government, Semi Govt bodies, Railways, Universities, Local Authorities etc.
C)List of Perquisites and Benefits in Kind
- Travelling allowance / petrol allowance.
- Electricity bills / water bills paid by employer.
- Entertainment allowance – deductions available.
- Income tax paid by employer.
- Children tuition / school fees paid by employer.
- Allowance or reimbursement for childcare – RM 2400 exemption per year.
d)Profit in lieu of salary is a part of salary income. This payment is made by the employer to his employee in lieu or in addition to his salary or wages. It is included in gross salary and taxed accordingly under the head “Income from Salary†.