Profit In Lieu Of Salary – Individual Taxation

Profit in lieu of salary is a part of salary income. It is included in gross salary and taxed accordingly. Profit in lieu of salary includes the following-
(a) Any compensation due to or received by a employee from his employer or former employer at or in connection with the termination of his employment or modification of the terms & conditions relating thereto is taxable as profit in lieu of salary after providing exemption u/s 10(10B) or 10(10C), if any.
(b) Any payment (except to the extent it is specifically exempt u/s 10) due to or received by an employee from his employer or former employer or from a provident fund, or other fund which may otherwise be taxable as income from salary.
(c) Payment from unrecognised provident fund or superannuation fund to the extent it does not consist of contribution by the employee or interest on employee’s contribution.
(d) Any sum received under a keyman insurance policy including the sum allocated by way of bonus on such policy.
(e) Any amount received in lump sum or otherwise from any person prior to his joining employment or after cessation of employment with that person.
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