ready reckoner chart that places Salary (Sec. 17(1)), Perquisites (Sec. 17(2)), and Profits in lieu of Salary (Sec. 17(3)) side by side

ready reckoner chart that places Salary (Sec. 17(1)), Perquisites (Sec. 17(2)), and Profits in lieu of Salary (Sec. 17(3)) side by side

📘 Ready Reckoner – Section 17(1), 17(2), 17(3)

SectionCoversExamplesEssence
Sec. 17(1) – SalaryBasic monetary payments received as part of employment- Wages, Basic Salary
- Advance salary
- Fees, Commission, Bonus
- Annuity or Pension
- Leave encashment (while in service)
- Employer’s contribution to RPF > 12% of salary
- Excess interest (>9.5% p.a.) credited to RPF		Direct and fixed compensation for services
Sec. 17(2) – PerquisitesBenefits/amenities provided by employer in addition to salary, in cash/kind- Rent-free accommodation
- Free/concessional education
- Free/Concessional travel
- Employer-paid electricity/medical bills
- ESOPs (taxable at exercise)
- Employer’s contribution to superannuation fund > ₹1.5 lakh
- Free car with driver		Fringe benefits enjoyed during service
Sec. 17(3) – Profits in lieu of SalaryAny compensation/amount received from employer/former employer connected to employment, not covered in (1) or (2)- Compensation on termination of employment
- Payments before joining/after cessation of service
- Ex-gratia from employer
- Amounts from unrecognized PF / unapproved superannuation fund
- Keyman insurance proceeds received by employee		Residual / compensatory receipts (usually at entry or exit)

🔑 Quick Memory Aid

  • 17(1): Salary = Fixed pay (cash components).

  • 17(2): Perquisites = Fringe benefits (extra facilities during service).

  • 17(3): Profits in lieu = Residual/Compensation (before joining, after leaving, or termination).

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