Income from Salary under Income-tax Act, 2025: Section-wise Mapping Explained

Introduction

The Income-tax Act, 2025 has reorganised and simplified several provisions of the old Income-tax Act, 1961. One of the most important heads of income for individuals is Income from Salary. While the core principles remain unchanged, the section numbers and structure have been streamlined for easier understanding and compliance.

This article explains Income from Salary under the Income-tax Act, 2025, along with a section-wise comparison with the Income-tax Act, 1961.

What is Income from Salary?

Income from Salary refers to remuneration received by an employee from an employer under an employer–employee relationship. It is taxable on a due or receipt basis, whichever is earlier.

Salary income includes:

Basic salary

Allowances

Perquisites

Bonuses and incentives

Retirement benefits (as applicable)

Salary Income: Old Act vs New Act (Section-wise Overview)
Particulars Income-tax Act, 1961 Income-tax Act, 2025
Chargeability of Salary Section 15 Re-numbered section under Salary Chapter
Definition of Salary Section 17(1) Corresponding simplified section
Allowances Section 17(2) Mapped and consolidated
Perquisites Section 17(2) & 17(3) Re-structured provisions
Profits in lieu of Salary Section 17(3) Integrated for clarity

(Note: Section numbers have been renumbered, but substance remains largely the same.)

Components of Salary under Income-tax Act, 2025
1. Basic Salary

Fully taxable unless specifically exempted.

2. Allowances

Allowances such as HRA, LTA, and special allowances are taxable unless exemption conditions are fulfilled.

3. Perquisites

Perquisites include benefits like rent-free accommodation, company car, concessional loans, etc. The valuation rules have been simplified and better structured in the 2025 Act.

4. Profits in Lieu of Salary

Payments received at or in connection with termination or modification of employment are covered here.

Deductions Available from Salary Income

Under the Income-tax Act, 2025, common deductions include:

Standard Deduction

Professional Tax (where applicable)

Entertainment Allowance (for government employees)

The standard deduction concept continues, ensuring relief to salaried taxpayers.

What Has Changed in Income-tax Act, 2025?

Clearer language and simplified structure

Logical grouping of salary-related provisions

Easier section navigation for taxpayers and professionals

Reduced interpretational ambiguity

Importantly, taxability principles remain the same, ensuring continuity.

Impact on Salaried Taxpayers

For salaried individuals:

No major compliance change

Better understanding of salary components

Easier cross-referencing of provisions

Simplified tax planning and assessment process

Conclusion

Income from Salary under the Income-tax Act, 2025 continues to follow the same taxation framework as the 1961 Act, but with better clarity and structure. The section-wise re-mapping helps both taxpayers and professionals adapt smoothly to the new law.

Salaried taxpayers should familiarize themselves with the new section references to avoid confusion in future assessments and filings.

Written by:
Abhishek Gupta
Chartered Accountant
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