ES वेतन से आपका क्या आशय है? वेतन शीर्षक के तहत अग्रिम वेतन एवं बकाया वेतन को समझाइए।

Meaning of Salary and Explanation of Advance Salary & Arrears

1. Meaning of Salary

Salary is the compensation paid by an employer to an employee for services rendered under an employment contract. As per Section 17(1) of the Income Tax Act, 1961, salary includes:

1. Basic Pay – The fixed amount paid to an employee.
2. Allowances – Additional payments like house rent allowance, dearness allowance, etc.
3. Perquisites – Benefits like free accommodation, car, or medical facilities.
4. Profits in Lieu of Salary – Any payment received instead of salary, such as compensation for voluntary retirement.
5. Pension – Payments received after retirement, except for family pension (which is taxable under "Income from Other Sources").

Tax Treatment: Salary is taxable under the head "Income from Salary" in the financial year when it is received, regardless of the period for which it is due.

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2. Advance Salary

Definition: Advance salary refers to the salary received by an employee before it becomes due. It is taxable in the year of receipt under Section 15 of the Income Tax Act.

Example of Advance Salary:

• Suppose an employer pays the salary for April and May 2025 in March 2025. This amount is taxable in FY 2024-25, even though the salary is due in the next financial year.

Tax Treatment of Advance Salary:

• It is taxable as salary income in the year of receipt.
• Relief under Section 89(1) can be claimed if receiving advance salary results in higher tax liability.

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3. Arrears of Salary

Definition: Arrears of salary refer to unpaid salary from previous years that is received in a later year.

Example of Arrears of Salary:

• If an employee was supposed to receive a salary increment in FY 2023-24 but gets the increased salary in FY 2024-25, the additional amount is considered arrears.

Tax Treatment of Arrears:

• It is taxable in the year of receipt.
• Relief under Section 89(1) can be claimed if arrears result in higher tax liability.

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4. Difference Between Advance Salary and Arrears of Salary

Feature	Advance Salary	Arrears of Salary
Definition	Salary received before it becomes due.	Salary due from a previous year but received later.
Year of Taxation	Taxable in the year of receipt.	Taxable in the year of receipt.
Reason	Paid in advance as per employer's decision.	Due to delay or retrospective increments.
Section for Relief	Section 89(1)	Section 89(1)

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Conclusion

Salary includes all payments made by an employer to an employee. Advance salary is taxable when received, even if it is for future services, whereas arrears of salary are taxable in the year of receipt, even if they relate to past services. To reduce tax liability, relief under Section 89(1) can be claimed for both cases.