ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

Salary×

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

Illustration

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.

Solution

1) Minimum Time Scale (MTS)

MTS = 10,000 × 12

= 120,000

2) Basic Salary

= 11,500 × 12

= 138,000

Salary

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)

Perquisites

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

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

Comments

    0 of 8192 characters used
    Post Comment

    • profile image

      ramarao.m 

      5 years ago

      I want to know more details about MTS currently

    • profile image

      Asam Chaudhry 

      8 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 

      9 years ago from Colorado

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

    • tim-tim profile image

      Priscilla Chan 

      9 years ago from Normal, Illinois

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

    working

    This website uses cookies

    As a user in the EEA, your approval is needed on a few things. To provide a better website experience, hubpages.com uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

    For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at: https://hubpages.com/privacy-policy#gdpr

    Show Details
    Necessary
    HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
    LoginThis is necessary to sign in to the HubPages Service.
    Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
    AkismetThis is used to detect comment spam. (Privacy Policy)
    HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
    HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
    Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
    CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
    Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the googleapis.com or gstatic.com domains, for performance and efficiency reasons. (Privacy Policy)
    Features
    Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
    Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
    Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
    Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
    Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
    VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
    PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
    Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
    MavenThis supports the Maven widget and search functionality. (Privacy Policy)
    Marketing
    Google AdSenseThis is an ad network. (Privacy Policy)
    Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
    Index ExchangeThis is an ad network. (Privacy Policy)
    SovrnThis is an ad network. (Privacy Policy)
    Facebook AdsThis is an ad network. (Privacy Policy)
    Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
    AppNexusThis is an ad network. (Privacy Policy)
    OpenxThis is an ad network. (Privacy Policy)
    Rubicon ProjectThis is an ad network. (Privacy Policy)
    TripleLiftThis is an ad network. (Privacy Policy)
    Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
    Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
    Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
    Statistics
    Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
    ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
    Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)