Basis of charge :

1. Section 15 deals with the basis of charge. Salary is chargeable to tax either on ‘due‘ basis or on ‘receipt‘ basis, whichever is earlier.

2. However, where any salary, paid in advance, is assessed in the year of payment, it cannot be subsequently brought to tax in the year in which it becomes due.

3. If the salary paid in arrears has already been assessed on due basis, the same cannot be taxed again when it is paid.

Examples:

i. If A draws his salary in advance for the month of April 2016 in the month of March 2016 itself, the same becomes chargeable on receipt basis and is to be assessed as income of the P.Y.2015-16 i.e., A.Y.2016-17. However, the salary for the A.Y.2017-18 will not include that of April 2016.

ii. If the salary due for March 2016 is received by A later in the month of April 2016, it is still chargeable as income of the P.Y.2015-16 i.e. A.Y.2016-17