Every rupee you earn eventually has to sit in one of five boxes before the taxman can touch it. Salary is the first box — and knowing exactly when your salary “counts” is where this new chapter of the Act actually begins.
We’ve spent this whole series so far on the scaffolding: who’s taxed, how much, and what counts as income at all. From here, the Income Tax Act, 2025 moves into the part every salaried Indian actually lives with, computing income under each head. Section 13 opens Chapter IV by sorting all income into five heads. Section 15 of Income Tax Act 2025 then answers the first practical question inside the Salaries head: not what counts as salary, but when it actually becomes taxable. Get this timing wrong, and even a correctly-computed salary figure lands in the wrong tax year.
Applicability note: Sections 13 and 15 apply from Tax Year 2026-27 onward. Both carry forward the substance of Sections 14 and 15 of the 1961 Act largely unchanged — this is a renumbering within the Act’s new Chapter IV structure, not a policy shift.
Section 13 of Income Tax Act 2025: Five Heads of Income
Before you can compute anything, the law needs a filing system. Section 13 provides exactly that: every rupee of income you earn, from whatever source, gets classified into one of five heads before tax is worked out on it.
Salaries
Income from an employer-employee relationship — the head this series covers next
Income from House Property
Rental and deemed rental income from owned buildings or land
Profits & Gains of Business or Profession
Income from running a business, trade, or profession
Capital Gains
Gains from transferring a capital asset — property, shares, and more
Income from Other Sources
The residuary head — anything genuinely taxable that doesn’t fit elsewhere
This five-head structure is carried forward without substantive change from Section 14 of the 1961 Act — the same classification Indian taxpayers have worked with for decades. What matters practically is that each head has its own computation rules, its own deductions, and in some cases its own loss-carry-forward restrictions, so correctly classifying income under the right head isn’t a formality. Put rental income under “Other Sources” instead of “House Property” by mistake, for instance, and you could lose access to deductions that only exist under the correct head.
Section 15 of Income Tax Act 2025: Chargeability of Salary
Salary sounds like the simplest head of income to pin down, until you ask a very ordinary question: what if your March salary lands in your account in April? Or your employer owed you a raise for months before actually processing it? Section 15 exists precisely to answer this, and it does so by naming three separate triggers, any one of which is enough to make salary chargeable in a given Tax Year.
When Is Salary Taxable: Due, Advance or Arrears?
- Salary due — any salary that becomes due from an employer to you within the Tax Year is taxable that year, whether or not it’s actually been paid yet.
- Salary paid or allowed in advance — if your employer pays or allows you salary in the Tax Year before it’s actually due, that’s taxable in the year you receive it, not the year it would otherwise have fallen due.
- Arrears of salary — if you receive arrears in the Tax Year that weren’t already taxed in an earlier year, they’re taxable now, in the year you actually receive them.
Two details make this workable in practice rather than a source of double taxation. First, “employer” includes a former employer — so a pension or a delayed final settlement from a job you’ve already left is still squarely inside this head. Second, and just as important: salary that’s already been taxed once, as an advance, is never taxed again when it subsequently becomes due in a later Tax Year. Without this rule, an advance payment could otherwise be taxed twice, once on receipt and again when it technically falls due.
Ananya’s employer processes her March 2027 salary a little late, crediting it to her account only in April 2027. Because the salary was due within Tax Year 2026-27 (which runs to 31 March 2027), it’s taxable in that Tax Year, regardless of the fact that the actual payment landed a few days into the next one. Separately, her colleague Rohit receives a lump-sum advance against his next six months’ salary in February 2027. That advance is taxed in Tax Year 2026-27, the year he actually received it — and when each month’s salary subsequently falls due over the following months, it won’t be taxed again, since it’s already been accounted for.
Why Partner Remuneration Is Not Taxed as Salary
Here’s a detail that trips up more people than it should: if you’re a partner in a firm and you draw remuneration, salary, bonus, or commission from that firm, it is not taxed under the Salaries head at all, even though it might look and feel exactly like a salary on your bank statement. A partner doesn’t have an employer-employee relationship with their own firm in the eyes of the law; the relationship is one of co-ownership, not employment. That remuneration is instead taxed under Profits and Gains of Business or Profession, following the specific rules that govern how much of it a firm can actually deduct when paying its partners.
- Assuming salary is only taxed when it hits your bank account — it isn’t. Salary that’s merely “due,” even if unpaid, is taxable the moment it becomes due
- Worrying about double taxation on advance salary — the Act specifically prevents this; once taxed as an advance, that amount isn’t taxed again when it falls due
- Forgetting that a former employer still counts — pension payments and delayed dues from a past job remain squarely within the Salaries head
- Treating a partner’s firm remuneration as salary income — it’s taxed under Business or Profession instead, with entirely different computation rules
Frequently Asked Questions
What are the five heads of income under the Income Tax Act 2025?
Salaries, Income from House Property, Profits and Gains of Business or Profession, Capital Gains, and Income from Other Sources, as set out in Section 13. Every source of taxable income is classified into one of these five heads before tax is computed.
Is salary taxed when it’s paid, or when it’s due?
It depends on which of the three categories the specific payment falls into. Section 15 taxes salary in the Tax Year it becomes due, the year it’s actually paid or allowed if that happens before it’s due (such as an advance), or the year arrears are received if they weren’t already taxed earlier. Any payment falling into one of these categories is chargeable on that basis.
If I receive an advance against future salary, is it taxed twice?
No. Section 15 specifically provides that salary paid in advance, once included in your total income for the year it’s received, is not included again when it subsequently becomes due in a later Tax Year.
Does a pension from a former employer count as salary income?
Yes. Section 15 explicitly extends “employer” to include a former employer, so pension payments and delayed dues from past employment remain chargeable under the Salaries head.
Is a partner’s remuneration from their firm taxed as salary?
No. Despite the name, a partner’s salary, bonus, commission, or remuneration from their own firm is taxed under Profits and Gains of Business or Profession, not under the Salaries head, since a partner isn’t an employee of the firm they co-own.
Income Tax Act 2025 — Series Index
Deemed Receipt & Income Deemed to Accrue in India (§7–10)
What actually counts as Indian income.
Previous Series, Part 6Incomes Not Forming Part of Total Income (§11–12)
What stays out of your taxable income altogether.
Heads of Income & Chargeability of Salary (§13, §15)
The five-head framework, and exactly when salary becomes taxable.
HRA & LTA: The Two Big Salary Exemptions
What counts as salary, and which allowances are actually tax-free.
Nothing in Section 15 changes how much salary you owe tax on. What it decides is which Tax Year that salary belongs to, due, paid early, or arrears, and getting that year wrong is exactly how salary income ends up misreported on a return that’s otherwise perfectly accurate. Before you file, check not just what you earned, but which Tax Year each rupee of it was actually due, paid, or received in.
Sources & References
- Income-tax Act, 2025 [Act No. 30 of 2025] — full text, as amended by Finance Act, 2026Income Tax India, incometaxindia.gov.in
- Income Tax India — Section 15, SalariesIncome Tax India, incometaxindia.gov.in
Sections 13 and 15 discussed here are summarised for reader convenience. Always cross-check against the official Act text linked above and consult a Chartered Accountant before relying on this for a filing decision.
Disclaimer: This article is for general informational purposes only and does not constitute tax or legal advice. The Income-tax Act, 2025 and related rules are subject to notifications and amendments by the CBDT. Please consult a qualified Chartered Accountant for advice specific to your situation.
