Profits in lieu of salary
can anybody please explain about Profits in lieu of salary chargeable U / s 17?
Replies (4)
Hello,
Any payment received or due in addition of your salary or wages from your employer is called profit in lieu of salary.
Profits in lieu of Salary (S. 17(3))
It includes —
- any compensation from employer or former employer on termination or modification of the terms of employment.
- any receipt from employer/former employer or from provident/other fund (other than gratuity, commuted pension, retrenchment compensation, house rent allowance, provident fund or such other funds) to extent not consisting of contributions by assessee/interest on such contributions.
- any sum received under a keyman insurance policy including the sum allocated by way of bonus on such policy.
- any sum received before his joining any employment or after cessation of his employment.
Thank you. Can you also explain how it is taxed in the hands of employee as well as employer ?
Profit in lieu of salary is a part of salary income. It is included in gross salary and taxed accordingly.
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