A payment cannot be taxed under the head 'Salaries' unless the relationship of employer and employee exists between the payer and the payee.
Salary is chargeable to tax on due or receipt basis, whichever matures earlier.
A sum not exceeding Rs 5,00,000 received at the time of voluntary retirement is exempt from tax provided the voluntary retirement scheme is framed in accordance with the prescribed guidelines. The employer shall deduct tax at source from the above payment only in case it exceeds the prescribed limit of Rs 500,000. The amount receivable on account of voluntary retirement of the employees does not exceed the amount equivalent to three months salary for each completed year of service at the time of retirement or salary at the time of retirement multiplied by the balance months of service left before the date of his retirement on superannuation. HRA actually received by the employee. Excess of rent paid over 10 per cent of salary.