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Updated on October 11, 2009

Minimum Time Scale (MTS)

MTS is the amount from where the salary scale of the particular employee starts.

Basic Salary

Basic salary means initial pay of any scale as well as annual increment received by an employee during his service.

Basic Salary = Initial pay of any scale + Annual increment


Mr. Akmal is working in the pay scale of 10,000-500-13,000 in a public company. For the tax year 2009, he received the following amounts:

Pay Rs. 11,500 per month

Bonus Rs. 20,000 for the year

Commission Rs. 10,000 for the year

Dearness allowance Rs. 20,000 for the year

Compute his MTS and basic salary.


1) Minimum Time Scale (MTS)

MTS = 10,000 × 12

= 120,000

2) Basic Salary

= 11,500 × 12

= 138,000


There are following definitions of salary under the Income Tax Ordinance, 2001.

Definition of Salary Applicable to the Sixth Schedule:

This definition has been given under; the rule-14 clause (h) of the part-1 of the Sixth Schedule.

"Salary" includes dearness allowance, if the terms of employment so provide, but excludes all other allowances and perquisites.

In brief

Basic Salary XXX

Add: Dearness Allowance XXX

Salary for valuation of approved provident fund/Approved

Superannuation fund/Approved gratuity fund XXX

Note:With examination point of view, if dearness allowance is not given in question, basic salary is also called salary for valuation of approved/ recognized provident fund etc.

In other words, in the absence of dearness allowance, basic salary shall represent salary for approved provident fund etc.

General Definition of Salary:

Salary means any amount received by an employee from an employment, whether such amount is, of a revenue or capital nature.

It includes the followings:

1) Pay, wages, leave pay, overtime, bonus, commission, fee, gratuity, work condition supplement.

2) Any perquisite, whether convertible into money or not.

3) Allowances.

4) Profit in lieu of or in addition to salary.

5) Pension, annuity or any supplement to pension or annuity.

6) Any amount chargeable to tax on account of Employee Share Option Scheme (u/s 14)


According to Black's Law Dictionary:

"Perquisites" means emoluments, fringe benefits or other incidental profits or benefits attaching to an office or position.

In other words, a something to which employee has a special right because of his / her employment position.

Incidental profit or benefit attaching to an office or position means any special facility which is provided by employer to employee due to such position.

Commissioner's house is provided to Commissioner by the Government due to his Commissioner's position.

In other words, Mr. Ali is a Commissioner; Government has provided him Commissioner's House.

Remember: House is affiliated with Commissionership. If Mr. Ali is transferred etc. such house is vested to the next Commissioner. In brief, such facility is attached with Commissionership rather Ali.

Under the Income Tax Law, "Perquisites" includes:

1) The value of rent free accommodation.

2) The value of any concession in rent of accommodation.

3) Value of any conveyance facility.

4) Any payment by employer for the benefit of employee, his / her spouse or dependent's of employee.

5) The value of any benefit provided free of cost.

6) The value of any benefit provided at a concessional rate.

7) Any sum paid by an employer in respect of any obligation of an employee.

8) Employee's children educational expenses paid by employer.


Allowances include cost of living allowance, dearness allowance, overseas allowance, house rent allowance, utilities allowance, entertainment allowance etc.


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    • profile image

      ramarao.m 4 years ago

      I want to know more details about MTS currently

    • profile image

      Asam Chaudhry 7 years ago

      ya........salary partition is very helpful for tax students like me.....very thanking u

    • prasadjain profile image

      Dr.S.P.PADMA PRASAD 8 years ago from Tumkur

      Such articles like these are helpful for ordinery employees who happen to rush to auditer even for simplepoints. This is an educative hub.

    • holmesjenn profile image

      holmesjenn 8 years ago from Colorado

      Very informative! I will refer back to this. Thank you

    • tim-tim profile image

      Priscilla Chan 8 years ago from Normal, Illinois

      Very good infomation! I just don't know anybody who makes 11,500 per month, LOL. Thanks for sharing.