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Remuneration received by MPs and MLAs is taxable under which Head? -Taxation of MPs and MLAs.

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Remuneration received by MPs and MLAs is taxable under which Head? -Taxation of MPs and MLAs.

In this blog we are talking about “Who are MPs and MLAs” and “Whether Salary or remuneration received by MPs and MLAs is taxable under the Head “Income from Salary” or “Income from Other Source”.

Who are MPs and MLAs?

MLA Stands for a Member of Legislative Assembly. MLA is a representative elected by the voters of an electoral district to the Legislation of a State in the Indian system of government. MLAs belong to a particular state and attend the assembly of their respective state and discuss matters regarding that particular state only.

MP Stands for a member of parliament.  A MP is a member of parliament i.e. a member of either of the two houses, the Lok Sabha or the Rajya Sabha.

Whether Salary or remuneration received by MPs and MLAs is taxable under the Head “Income from Salary” or “Income from Other Source”.

For charging an income under the Head “Income from Salary”, there must be an employer-employee relationship between the payer and payee. Remuneration paid by the Government ta M.P. & M.L.A is called salary but It is not taxable as salary.  As there is no employer-employee relationship between Government and M.P.& M.L.A. because MPs and MLAs are not employed but are elected by the public, and as a result of which they acquire constitutional position.

MPs and MLAs remuneration is not salary because of absence of employer-employee relationship and therefore, such remuneration will be taxable as “Income from Other Sources” and not as “Income from Salary”.

Hence, Remuneration received by MPs and MLAs is taxable under the head “Income from Other Sources” subject to exemption under section 10(17) of income tax act,1961.

Exemption of Income of MPs and MLAs:
As per section Sec. 10(17) of Income Tax Act,1961, Any income by way of Daily allowance received by MPs and MLAs and Constituency allowance received by MLAs are exempt from tax. Any other allowance received by MPs and MLAs are exempt subject to certain condition.

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