Section 16
Section 16: income from salary
Section 16 gives the inclusive definition of "salary" for the purposes of the salary provisions of this Act. It is deliberately broad, sweeping in not just basic wages but pensions, gratuity, perquisites, unavailed leave payments, and specific fund-related accretions and employer contributions.
What "salary" includes
For the purposes of this Part, "salary" includes:
- Wages
- Any annuity or pension
- Any gratuity
- Any fees or commission
- Perquisites
- Profits in lieu of, or in addition to, any salary or wages
- Any advance of salary
- Any payment received by an employee for a period of leave not availed of
- The annual accretion to a recognised provident fund balance, to the extent chargeable to tax under Schedule XI, Part A, paragraph 6
- The transferred balance in a recognised provident fund, to the extent chargeable to tax under Schedule XI, Part A, paragraph 11(4) and 11(5)
- Employer/Central Government contributions to an employee's pension scheme account under section 124
- Central Government contributions to an individual's Agniveer Corpus Fund account under the Agnipath Scheme referred to in section 125
Frequently asked questions
Is a bonus part of "salary" under Section 16?
The section's list does not name "bonus" separately, but items like "fees or commission" and "profits in lieu of, or in addition to, any salary or wages" are included - bonus is generally taxed as part of salary income under related provisions such as section 18 (profits in lieu of salary).
Are provident fund and pension contributions part of salary?
Yes, in specified circumstances - the annual accretion to a recognised provident fund (to the extent taxable under Schedule XI), certain transferred provident fund balances, employer/Government contributions to a section 124 pension scheme, and Government contributions to the Agniveer Corpus Fund are all included as salary under this section.
Related sections
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Talk to our tax team about this sectionLast updated 9 September 2026