f9 Salary & Wages are identical in the Income tax Act Voluntary Payments: The Act does not make any difference between voluntary and contractual payment. Both are taxable as salary Remuneration for Extra Work: Where an employee gets extra payment from his employer (in such capacity) for work performed outside the duties of his office and thus, such payment shall be taxable as salary Salary from more than one source: If an individual receives salary from more than one employer during the same previous year, salary from each employer shall be accumulated and taxable under the head -Salaries" Salary from former, present or prospective employer is chargeable to tax under the head Salaries" Eg. Pension from a former employer and advance salary from prospective employer shall be taxable under the head Salaries Foregoing of salary: Once salary has been earned by an employee, its subsequent waiver does not make it exempt from tax liability. Such walver shall be treated as application of the income. Note: However, where an employee opts to surrender his salary to the Central Government us 2 of Voluntary Surrender of Salaries (Exemption from Taxation) Act, 1961, the salary so surrendered shall not be taxable Salary is chargeable to tax either on 'due' basis or on 'receipt' basis, whichever is earlier. Hence, taxable salary includes: a) Advance salary (on receipt' basis): Salary paid in advance is taxable under the head 'Salaries in the year of receipt. Note: Such advance salary shall not be included again in the total income when the salary becomes due. b) Outstanding salary (on due' basis): Salary falling due is taxable under the head "Salaries in the year in which it falls due Note: Such due salary shall not be included again in the total income when it is received. c) Arrear salary: Any increment in salary with retrospective effect which have not been taxed in the past, such arrears will be taxed in the year in which it is allowed. Arrear salary are taxable on receipt basis PROVISION ILLUSTRATED Mr.X joined A Ltd. for a salary of 5,000 p.m. on 1/4/2016. In the year 2017-18 his increment decision was pending On 1/4/2018, his increment was finalized as for 2017-18: 1,000 pm and for 2018-19 1,500 pm Such arrear salary received on 5/4/2018. Find Gross taxable salary. Further, salary of April 2019 has also been received in advance on 15/03/2019