(1) Subject to the provisions of sub-section (2), income  from employment shall include the following incomes, namely:-

(a) any pecuniary receipts, salaries and benefits received or due from employment;  income earned from employee share schemes; untaxed salary arrears; or  

(d) any amount or benefit received from any past or future employer. 

(2) Income from employment shall not include the following receipts, namely:- 

(a) amounts received for medical expenses related to heart, kidney, eye, liver and cancer operations of any such employee who is not a shareholder director, or

(b) conveyance allowances, traveling allowances and daily allowances received and expended wholly and solely for the   performance of the duties of the service.

 Explanation.—For the purposes of this section,— 

(a) “Salary” means sums of any nature received by an employee from employment and shall include the following items, namely:- 

(i) any salary, wages or remuneration;

(ii) any allowance, holiday allowance, holiday encashment, bonus, fee, commission, overtime;

(iii) advance salary;

(iv) gratuities, annuities, pensions or supplements thereof;

(v) Perquisites; receipt in lieu of salary or wages or receipt in addition to salary or wages;

(b) “Receipt in Lieu of Salary or Wages” or “Receipt in addition to Salary or Wages” shall include;— 

(i) any compensation, by whatever name, received on account of termination of employment;

(ii) except the remainder other than the contribution of the employee to the provident ffnd or any other fund; 

(iii) the fair market value of sums or benefits received as a result of change in the terms of the contract of employment;

(iv) the fair market value of sums or benefits received on joining the service or under any other condition of the service;

(c) “Perquisite” means any payment or benefit, including   incentive bonus, paid by the employer to the employee, but shall not include the following payments, namely:- 

(i) basic pay, arrears, advance salary, festival allowance, holiday allowance, leave encashment and overtime;

(ii) contributions paid to recognized provident funds,  approved pension funds, approved provident funds and  approved Superannuation funds; 

(d) “Basic Salary” means the salary payable monthly or otherwise on the basis of which other allowances and benefits are determined, but shall not include the following allowances or benefits, namely:- 

(i) all allowances, perquisites, annuities, bonuses and benefits; and

(ii) contributions made by the employer to various funds of   the employee;

(e) “Employer” means the person who employs and pays the wages or the person who performs the said work on behalf of the employer shall also be deemed to be the employer.