How to show Bonus in ITR | AY 2018 19

How to show Bonus in ITR  |  AY 2018 19



Hi Amlan, Thank you for sharing such a useful knowledge to all of us for free.

In my Form 16, the annual bonus which I received in financial year 17-18, is classified under "Salary as per provisions contained in sec.17(1)" but in your youtube video, you mentioned that “Bonus amount” we need to enter under "Profits in lieu of salary", while filling return.



Can you please confirm that Bonus amount must be entered under “Profits in lieu of salary” while filling return.



The bonus amount must NOT be entered under

(i) Salary (only basic),

(ii) Allowance not exempt and

(iii) value of perquisites, while filling return.

Thank you once agaiN



Solution - #makeknowledgefree









(i) Case - 1 : Bonus included in salary as per provisions in section 17(1) i.e Gross salary

- This is your case



When bonus is already considered as a part of the Gross salary i.e "Salary as per provisions contained in sec.17(1)" , it would be wrong to again show the bonus separately as profits in lieu of salary ...



So, basically, in such cases , one is required to keep profits in lieu of salary nil since your gross already has profits i.e Bonus incorporated in it ...



The bonus in such cases actually now form a part of non exempt allowances

(Non exempt allowances = Gross - Basic pay (!2 months) - Exempt allowances.)





(ii) Case - 2 : Bonus not included in salary as per provisions in section 17(1) i.e Gross salary





Some companies don't account for bonus under gross salary i.e salary as per provisions in section 17(1)

They show bonus separately under "Profits in lieu of salary" head



In such cases, it is therefore required to show bonus under profits in lieu of salary.

As you will appreciate better now , here the non exempt allowances derived from the formula ((Non exempt allowances = Gross - Basic pay (!2 months) - Exempt allowances.)) doesn't comprise of the bonus.

...

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In both cases, this doesn't effect the chargeable income and so the revenue is not concerned much



Revenue is more concerned with the salary exemptions U/section 10 and salary deductions under section 16 that one avails because that is causing loss of tax.