Chapter IV - Computation of Total Income
Section 15
Section 15: salaries
Section 15 is the charging section that brings salary income into tax under the head "Salaries". It fixes exactly which payments are taxed and when - salary that has become due, salary actually paid even before it is due, and arrears of salary not taxed earlier.
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Need advice on Section 15?
This article is for general information. Refer to the Income-tax Act, 2025 as amended by the Finance Act, 2026 and the Taxation and Other Laws (Amendment) Act, 2026 for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
(1) The following income shall be chargeable to income-tax under the head “Salaries”:— (a) any salary due from an employer to an assessee in the tax year, whether paid or not; (b) any salary paid or allowed to him in the tax year by or on behalf of an employer though not due or before it became due to him; (c) any arrears of salary paid or allowed to him in the tax year by or on behalf of an employer, if not charged to income-tax for any earlier tax year.
(2) For the purposes of sub-section (1), employer includes former employer.
(3) If any salary paid in advance is included in the total income of any person for any tax year, it shall not be included again in the total income of such person when the salary becomes due.
(4) Any salary, bonus, commission or remuneration, by whatever name called, due to, or received by, a partner of a firm from the firm shall not be regarded as salary for the purposes of this section.
Introduction
Section 15 is a timing and classification rule. It taxes salary when due or paid in advance, and arrears when paid if not taxed earlier, while preventing the same advance salary from being charged again.
Key takeaways
When salary is taxed
Salary due from an employer is chargeable even if unpaid; salary paid before it is due is also chargeable in the year of payment.
Arrears and double taxation
Arrears are brought into the salaries head if they were not charged to tax earlier; salary paid in advance is not taxed again when it later becomes due.
Partner remuneration
Salary, bonus, commission or remuneration received by a partner from a firm is excluded from the salaries head under this section.
What is chargeable under "Salaries"
Section 15(1) charges to tax under the head "Salaries":
- Any salary due from an employer to the assessee in the tax year, whether paid or not.
- Any salary paid or allowed to the assessee in the tax year by or on behalf of an employer, even if it was not yet due or before it became due.
- Any arrears of salary paid or allowed to the assessee in the tax year by or on behalf of an employer, if it was not already charged to tax in an earlier tax year.
Other rules in this section
"Employer" for this purpose includes a former employer (section 15(2)).
If salary paid in advance has already been included in a person's total income for a tax year, it is not taxed again in the year it actually becomes due (section 15(3)).
Any salary, bonus, commission or remuneration (by whatever name called) due to or received by a partner from their firm is not treated as "salary" under this section (section 15(4)) - such amounts are taxed differently, under the business/profession provisions applicable to firms and partners.
Reconcile current and earlier years
List salary due in the year even if unpaid, advance salary actually paid, and arrears paid that were not taxed before.
Track an advance already taxed so the amount is excluded when it later becomes due; keep former-employer payments in the same reconciliation.
Step-by-step flow for applying Section 15
- 1
Is the payer an employer or former employer?
Section 15(2) includes a former employer. Amounts a partner receives from the firm are not salary (Section 15(4)).
- No: Not chargeable under "Salaries"; consider the other heads.
- Yes: Go to the next step.
- 2
Was the salary due in the tax year?
- Yes: Chargeable in that year whether or not paid (Section 15(1)(a)).
- No: Go to the next step.
- 3
Was it paid or allowed in the tax year before it became due, or is it arrears?
Advance salary is chargeable when paid or allowed (clause (b)); arrears are chargeable when paid or allowed if not charged for an earlier tax year (clause (c)).
- 4
Avoid double counting
Under Section 15(3), salary already taxed as an advance is not included again when it becomes due.
Practical checklist
Do
- Reconcile payslips, employer certificates and bank receipts to the year in which salary became due or was paid in advance.
- Keep a record of prior-year tax treatment of arrears and advances.
Avoid
- Do not tax the same advance again on its later due date.
- Do not classify a firm's payment to a partner as salary under this section merely because it is named remuneration.
Illustrative example
Worked example: due, advance and arrears in one year
Hypothetical facts (illustration only, not a real taxpayer): Mr. Pillai's salary is ₹1,00,000 a month. For the tax year 2026-27 (1 April 2026 to 31 March 2027): his March 2027 salary falls due on 31 March 2027 but is paid on 7 April 2027; in March 2027 he is paid his April 2027 salary of ₹1,00,000 in advance; and in January 2027 he receives arrears of ₹60,000 relating to an earlier year that were not charged to tax for any earlier year.
Salary due
Twelve months' salary falls due in 2026-27, including March 2027 though paid later: 12 × ₹1,00,000 = ₹12,00,000 (clause (a)).
Advance salary
The April 2027 salary paid before it became due is chargeable in 2026-27: ₹1,00,000 (clause (b)).
Arrears
The ₹60,000 arrears, not charged for an earlier year, are chargeable when paid: ₹60,000 (clause (c)).
Total under Section 15 for 2026-27
₹12,00,000 + ₹1,00,000 + ₹60,000 = ₹13,60,000, before deductions under the Salaries head.
Outcome
- In 2027-28 the April 2027 salary is not included again when it falls due (Section 15(3)).
- The March 2027 salary is charged in 2026-27, when it fell due, even though it was paid in April 2027.
Glossary
- Salary due
- Salary that has become payable to the employee, whether or not already paid.
- Arrears
- Salary paid later than the year it became due; Section 15 asks whether it was taxed earlier.
Frequently asked questions
Is salary taxed only when it is actually paid?
No - Section 15(1) taxes salary that is due (whether paid or not), salary actually paid or allowed before it becomes due, and arrears of salary not already taxed earlier - so due-but-unpaid salary is still taxable in the year it becomes due.
Is a partner's remuneration from their firm taxed as 'salary'?
No - Section 15(4) specifically excludes a partner's salary, bonus, commission or remuneration from a firm from being treated as salary under this section.
Need help applying this provision to your situation?
Talk to our tax team about this sectionLast updated 9 October 2026