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Notes/CA Intermediate/Taxation (Income Tax + GST)

CA Intermediate · Taxation (Income Tax + GST)

Income from Salary (Sec 15-17)

Chapter 2 · 3 formulas · 4 exam-critical pointers

Core concepts

  1. 01Salary taxable on due or receipt basis whichever earlier.
  2. 02Allowances: HRA, LTA, Children Education, Transport — exempted under specific conditions.
  3. 03Perquisites: rent-free accommodation, motor car, ESOP, free meals (valuation rules in Rule 3).
  4. 04Standard deduction ₹50,000 (old regime) / ₹75,000 (new regime AY 2025-26).
  5. 05Gratuity, leave encashment, VRS, retrenchment compensation — partial/full exemptions.

Flowchart summary

Salary Components | Basic + DA + HRA + Bonus + Commission + Allowances + Perquisites | Less: Exempt allowances + Std Deduction (₹50K/₹75K) | Less: Professional Tax (Sec 16(iii)) | = Taxable Salary

Exam-critical pointers

  • ⭐New regime (Sec 115BAC) default from AY 2024-25; opting out via Form 10-IEA.
  • ⭐Leave encashment on retirement: non-govt limit ₹25 lakh (raised in Budget 2023).
  • ⭐Employer's contribution to NPS (Sec 80CCD(2)): 14% of salary for govt employees, 10% for others.
  • ⭐Reimbursement vs Allowance distinction critical for taxability.

Make it click

Formula sheet

  • HRA Exempt = Min of: (a) Actual HRA, (b) 50%/40% of Salary, (c) Rent − 10% of Salary
  • Gratuity Exempt (non-govt covered by Act) = Min(₹20L, actual, 15/26 × last salary × yrs)
  • Rent-free Unfurnished (govt) = Licence fee; Non-govt = 10%/7.5%/15% of salary basis population

More from Taxation (Income Tax + GST)

  1. Ch 1Basics & Residential Status (Income Tax)
  2. Ch 3Profits and Gains of Business or Profession (Sec 28-44)
  3. Ch 4GST — Charging Section & Levy
  4. Ch 5GST — Input Tax Credit (Sec 16-18)
  5. Ch 6Deductions under Chapter VI-A (Sec 80C-80U)
All CA Intermediate notes →
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