(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;

          (b)  income earned from employee share schemes;

          (c)  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 job.

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, 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;

(vi) 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)   the remainder other than the contribution of the employee to the provident fund or any other fund;

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

(iv)   the fair market value of sums or benefits received on j01mng the service or under any other condition of the service;

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

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

(ii) contributions paid to recognized provident funds, approved pension funds, approved provident funds and approved old-age funds;

(d) “Basic salary” means the salary payable monthly or otherwise on the basis of which other allowances and benefits are determined, but the following allowances or benefits shall not be included in the basic salary, 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 and salaries or the person who performs the work on behalf of the employer shall also be deemed to be the employer.