The pay of the employee or employer is based on Section 15 of the Income Tax Act. It will be subject to income tax under the following sections for “Salaries”:

  • The salary is required on the part of the employer or a previous employer to evaluate whether the wage has been paid or not during the past several years.
  • In the previous few years, when the employer or someone acting on their behalf paid him his salary before it was due or before it became due from them.
  • If there is any difficulty or issue with the salary that has been paid to him recently by, or in the place of, the employer, or any former employer if they did not deduct it from their prior years’ income taxes.

Example – 1. When there are no longer any questions, it is officially stated that advance payments of wages will be included in a person’s yearly total income and will not be included in that person’s yearly total income when the advance payment is due.

Section 15 of the Income Tax Act

Example – 2: Salary, bonuses, commissions, or other payments received by a partner of a firm from any firm under any other name should not be considered “salary” for the purposes of section 15 of the Income Tax Act.

Must Read What is Section 80C?

Key Terms In Section 15 of the Income Tax Act

Some important terms in section 15 are: 

Salary arear

Salary arrears are outstanding payments that are expected to be made at the conclusion of a certain term after failing to make the necessary payments. As a result, the total amount of arrears is equal to the total of all payments that have accrued over time. at the time the initial payment became due. For instance, the business paid its staff salaries.


A form of financial reward that goes above and beyond the recipient’s typical payment expectations is a bonus. These bonuses may be given out by businesses as incentives or rewards for good work. Therefore, signing, referral, and retention incentives are examples of common incentive bonuses that a business might offer to employees.


The commission is given to someone in exchange for their working hard and then getting paid. The building’s owner commissioned the brand-new painting that hangs in the lobby. An investigation- or oversight-related special committee may have a commission as a senior position.


A sort of payment or compensation received in exchange for services or work is known as remuneration. This covers the base pay as well as any incentives or other financial perks that an executive member, employee, or employee receives while they are employed.