Income From Salary Under The Income Tax India Act2025: A Critical And Contemporary Analysis Of Taxability, Allowances, Perquisites And Deduction

Abstract

Income from salary play an  important role in  taxable income under Indian direct-tax law. For a large section of the working population, salary represents the principal source of livelihood and, consequently, the principal basis of individual income-tax liability. The legal concept of salary is more vast and larger than the ordinary  understanding of monthly wages or basic pay. It encompasses pension, wages, fees, compensassion, profit lieu of salary, income, advance salary, leave encashment and employer’ contributions. Hence, these receipts of Taxation  is  dependent upon statutory classification, the existence of an employer–employee relationship, the time of accrual or receipt, applicable exemptions, valuation of perquisites and deductions. The introduction of the Income-tax Act, 2025 marks a significant development in India's direct-tax framework. The new legislation rearranges the requirements relating to salary and introduces a relatively simplified statutory architecture. Section 15 governs the Taxability of salary,section 16 provides an including definition of salary and section 19 prescribes deductions from salary income. The new Act also integrates tax-deduction-at-source provisions, with section392 patic governing dually education of tax from salary payments.

This article analyses the employer–employee relationship, basis  of charge, components of salary, benefits, additional benefits,  retirement benefits, salary-TDS and deduction etc. It further compares the conceptual framework of the 2025 Act with the earlier Income-tax Act,1961 and examines raising problems and issues  from remote employment, contractual work, flexible compensation and non-monetary employment benefits. The article argues that the effectiveness of the new salary-tax regime depends upon statutory certainty, equitable treatment, simplified compliance and an analysis capable of responding to changing employment relationships.