Sub-section (1) is the charging rule for the head "Salaries" and has three limbs: clause (a) charges any salary due from an employer to an assessee in the tax year, whether paid or not; clause (b) charges any salary paid or allowed in the tax year by or on behalf of an employer though not due or before it became due; and clause (c) charges arrears of salary paid or allowed in the tax year, if not charged to income-tax for any earlier tax year.
Sub-section (2) extends "employer" in sub-section (1) to include a former employer. Sub-section (3) prevents double taxation of advance salary: salary already included in total income for a tax year is not included again when it later becomes due. Sub-section (4) takes partner remuneration out of this head — any salary, bonus, commission or remuneration, by whatever name called, due to or received by a partner of a firm from the firm is not regarded as salary for the purposes of this section.
Why it is there
Salary can be earned, become due and be paid in three different years, and without a rule the same rupee could be taxed twice or escape entirely. The section fixes the year of charge on whichever of due or receipt comes first, catches arrears in the year of payment only if they have not already been taxed, and then blocks the second bite through sub-section (3). Sub-section (4) settles a recurring classification fight by taking a partner's remuneration out of the salary head altogether.
Who it applies to
An employee or other assessee to whom salary is due, or who is paid or allowed salary
An employer paying or allowing salary, including a former employer
A person receiving arrears of salary in a tax year
A person receiving salary in advance of the year in which it becomes due
A partner of a firm receiving salary, bonus, commission or remuneration from the firm
What this means in practice
The charge does not wait for payment. If salary is due in the tax year it is taxed in that year even if the employer never pays it, and if it is paid early it is taxed when paid — so the year of charge is effectively the earlier of the two events, and sub-section (3) stops the later event charging it again. Arrears are different: clause (c) charges them in the year of payment only "if not charged to income-tax for any earlier tax year". Money from a former employer is still salary because of sub-section (2), while money from a firm to its own partner never is, because of sub-section (4).
An example
Illustrative only, and invented for this page. The figures are chosen to show the rule biting, not taken from any real matter.
An individual's salary for March is due on 31 March but the employer pays it in April of the following tax year. It is taxed in the year it fell due under clause (a), not the year of payment. If the same employer separately pays two lakh rupees in that later year as arrears of an earlier year's salary that was never charged, clause (c) brings that two lakh into the later year. A partner of a firm drawing five lakh rupees a year as remuneration from the firm reports nothing under this head at all, because sub-section (4) says it is not salary for the purposes of this section.
Where you meet this section
This is the head under which every salary entry in a return of income is computed, and the provision behind the tax deducted at source on salary and the employer's statement of perquisites. You meet it directly in an assessment that adds unpaid but due salary to a year, or that disputes the year in which arrears or advance salary belong.
The words themselves
any salary due from an employer to an assessee in the tax year, whether paid or not
Section 15(1)(a), Income-tax Act, 2025.
any arrears of salary paid or allowed to him in the tax year by or on behalf of an employer, if not charged to income-tax for any earlier tax year.
Section 15(1)(c), Income-tax Act, 2025.
Any salary, bonus, commission or remuneration, by whatever name called, due to, or received by, a partner of a firm from the firm shall not be regarded as salary for the purposes of this section.
Section 15(4), Income-tax Act, 2025.
What people get wrong
Treating salary as taxable only when received. Clause (a) charges salary due in the tax year whether paid or not.
Taxing advance salary again in the year it falls due. Sub-section (3) bars the second inclusion where the advance was already included in total income for an earlier tax year.
Taxing all arrears in the year of receipt. Clause (c) charges arrears only if they were not charged to income-tax for any earlier tax year.
Treating a payment from a former employer as outside the salary head. Sub-section (2) makes "employer" include a former employer for sub-section (1).
Putting a partner's remuneration from the firm under "Salaries". Sub-section (4) expressly denies that characterisation for this section, whatever the payment is called.
What this replaced
The correspondence is the Income Tax Department’s own, from its comparison utility for the 1961 and 2025 Acts. A renumbering is the easy half; whether the words changed is the half that decides cases.
A circular binds the department, not you and not a court. Every one below was written under the 1961 Act; it reaches this section because the department’s own concordance carries the provision it names to this one.
Circular No. 3/2025 — Income tax deduction from salaries during the financial year 2024 25 under section 192 of the income tax act 1961 2025-02-20
Circular No. 8/2005 — CIRCULAR FINANCE ACT, 2005 - FBT Finance Act, 2005 - Explanatory Notes on the Provisions relating to Fringe Benefit Tax 2005-08-29
Circular No. 602 — Section 9 l Instructions to Subordinate Authorities 1991-06-05
Circular No. 127 — 628-632. Agreement for avoidance of double taxation with Pakistan - Whether operative for assessment year 1972-73 and subsequent a 1974-01-10
Circular No. 46 — 64. Expressions "salary" and "year" as used in clause (10) as it stood prior to its substitution by Finance Act, 1974 - Interpreta 1970-09-14
A notification is made under a power the Act gives and, within that power, is law. These too were made under the 1961 Act and are placed here by the department’s concordance.
Read this before you rely on it. Every decision below was decided under the Income-tax Act, 1961. It appears here because it is tagged to a 1961 provision that the department’s own mapping carries to section 15. That is an inference we have drawn, not a holding on the new section: where the words changed in the move, the reasoning may not survive. Treat this as the place to start looking, not as authority on the 2025 Act.
Dr Mathew Cherian v ACITHigh CourtHelps taxpayertagged s.15 I'm a consultant doctor at a hospital. Can the AO reopen and tax my fees as salary?
Nishithkumar Mukeshkumar Mehta v Dy CITHigh CourtHelps departmenttagged s.15 Is compensation for the fall in value of stock options taxable as salary if I keep the options?
Sanjay Baweja v Dy CITHigh CourtHelps taxpayertagged s.15 My employer paid me for the fall in value of options I never exercised. Is that a perquisite?
Sudip Rungta v DCITITATHelps taxpayertagged s.15 The AO added my performance bonus to salary and cut my hra exemption. Can he do that?
Free calculators on VittSphere ONE for the very provision this page is about. They open in the same window.
Salary and CTC calculator— what a cost-to-company figure becomes in the hand after the standard deduction and the two regimes.
What this page does not tell you. It does not reproduce the section. Everything above was written from the section’s own text as the Income Tax Department publishes it — the text is here, and nothing here is advice on your facts. Where a figure matters, read the sub-section it comes from.
