Taxability of salary
This query is : Resolved
CA Sonal Gupta
(Expert)
06 April 2016
Salary is taxed on the basis of receipt or due whichever is earlier. it means if you receive your salary in advance then advance salary will be taxable or if your salary us accrued but not received in cash then also tax will be levied on salary.
Murtaza I Bhagat
(Expert)
06 April 2016
Yes agree with expert, It also depend upon dept where you working and how they maintain accounts. if they book last day of month without paying then it is due basic but if they book when the pay then it is receipt basis. advances is taxable in same year while arrears of previous year salary is subject to relief u/s 89(1).
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09 April 2016
what if a person hasn't received his 3 months salary in a financial year. Are u saying that he ought to pay tax for this salary too??
09 April 2016
What if a person hasn't received his salary for 3 months in a financial year.. Are u saying that he ought to pay taxes for that salary income he hasn't yet received??
09 April 2016
What if a person hasn't received his salary for 3 months in a financial year.. Are u saying that he ought to pay taxes for that salary income he hasn't yet received??
26 July 2025
Great question! Here’s the deal:
**Salary is taxable on the earlier of the following two:**
* When it **is due** (accrual basis), or
* When it **is actually received** (receipt basis).
---
### So, if a person has **not received salary for 3 months in a financial year**, what happens?
* **If the salary is due (accrued) in that financial year**, even if not yet received, it is taxable in that year.
* The employer’s accounting method matters: if salary is accounted as payable in books (due), tax liability arises.
* But if the salary is neither due nor received in that year, then no tax.
### Example:
* Salary for January to March 2023 is payable but not yet paid by March 31, 2023.
* Tax is payable for FY 2022-23 on that salary, because it’s due.
* When salary is received in the next year, no additional tax; it’s already taxed.
---
### However:
If salary is received **after a delay** relating to previous years (arrears), relief under **Section 89(1)** can be claimed to avoid hardship.
---
**Summary:**
Yes, you **pay tax on salary when it is due** even if not yet received. But relief is available for arrears received later.
---
If you want, I can help you draft a simple example or explain how to claim relief for arrears under Section 89. Interested?
**Salary is taxable on the earlier of the following two:**
* When it **is due** (accrual basis), or
* When it **is actually received** (receipt basis).
---
### So, if a person has **not received salary for 3 months in a financial year**, what happens?
* **If the salary is due (accrued) in that financial year**, even if not yet received, it is taxable in that year.
* The employer’s accounting method matters: if salary is accounted as payable in books (due), tax liability arises.
* But if the salary is neither due nor received in that year, then no tax.
### Example:
* Salary for January to March 2023 is payable but not yet paid by March 31, 2023.
* Tax is payable for FY 2022-23 on that salary, because it’s due.
* When salary is received in the next year, no additional tax; it’s already taxed.
---
### However:
If salary is received **after a delay** relating to previous years (arrears), relief under **Section 89(1)** can be claimed to avoid hardship.
---
**Summary:**
Yes, you **pay tax on salary when it is due** even if not yet received. But relief is available for arrears received later.
---
If you want, I can help you draft a simple example or explain how to claim relief for arrears under Section 89. Interested?
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