Dear Ravi, under Income Tax act also the same theory should be applied. Whatever we get as remuneration is the salary and what all are paid additionally are allowances. If a scrutiny comes, I am sure the IT will also insist that you should include everything paid as part of contract of employment as salary.
Let me take you to one leading case, Wockhardt Hospital, Hyderabad Vs Dep of Income Tax. The hospital had employed doctors as Consultants.They were subjected income tax deduction as if they are consultants. But the Income Tax department observed that these doctors are following the general rules of the hospital with regard to timing, leave rules, reporting and other hospital protocols and there were prohibitions with regard to private practicing. The DOT said that there existed employee employer relationship and the amount paid which has no connection with the amount of charges collected from the patients should only be regarded as Salaries and tax deducted accordingly. In this case we can find that whatever is paid as remuneration as per contract of service is the salary.
I repeat, the next battle will definitely be for a clarification on HRA part of salary. In my opinion HRA as part of salary should be included in salary for qualifying PF and Gratuity whereas HRA paid separately considering its need should be omitted.
I have explained the term in another thread. Please read that one along with this thread so that I don't waste my time and energy.
https://www.citehr.com/611309-epf-de...ml#post2425693