Section 8 : Computation of income earned from employment

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1) The remuneration derived by any natural person from employment in any income year shall be computed as the income earned by that person in that year.

2) The following amounts received by any person in any income year shall be included in computing the profits and benefits derived by that person from investment in that income year:

a) Amount for wages, salary, leave, amount for overtime work, fee, commission, prize, gift, bonus, and payment for other facilities

b) Payment for any personal allowance, including the amount for dear allowance, subsistence allowance, entertainment and transport allowance,

c) Payment received for settlement of or reimbursement of expenses incurred by his or her associated person for personal purposes,

d) Payment made for having given consent to any terms of employment,

e) Payment made for termination, loss of employment, or for compulsory retirement,

f) Retirement payment and retirement contribution, including the amount deposited by the employer for that employee in the retirement fund,

g) Other payments made in respect of employment and

h) Other amounts required to be included pursuant to Chapter 6 or 7.

3)  Notwithstanding anything contained in Sub-section (2), the following matters shall not be included in computing profits and benefits derived by any person from investment:

a) The amounts deductible under Sections 10, 54 and 69 and payment from which tax is withheld finally, and

b) Food and Tiffin provided by the employer to the employee at the work site in a manner that it is available to all employees on the same terms,

c) The settlement or reimbursement of the following expenditure incurred by any employee:

1) The expenditure fulfils the business purpose of the employer or

2)The expenditure exempted or to be exempted in the computation of the income earned from investment.

d) Payment of such petty amounts of which accounts are impracticable to be maintained or difficult to be maintained administratively as prescribed.

Explanation: For purposes of this section, “payment” means the payment:-

(a) made by the employer,

(b) made by the associated person of the employer and

(c) made by any third person as referred to in the agreement made with the employer or his associated person.

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Section 8 : Computation of income earned from employment

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