‘Salary’ under section 17(1), includes the following:-
- Any annuity or pension
- Any gratuity
- Any fees, commission, perquisites or profits in lieu of or additions to any salary or wages
- Any advance of salary
- Leave encashment
- Provident fund
- The contribution made by the central government or any other employer in the previous year to the account of an employee under a pension scheme
As the definition of salary also includes any advance salary received, it means the advance salary is taxable in the year it was actually received (on receipt basis) and included in the calculation of taxable income under the head of salary for that previous year.
In the above case advance salary for the month of April, 2019 received in March, 2018, which is taxable in the Previous year 2018-2019, for which the Assessment year is 2019-2020.