In the hospitality and entertainment Industry, customers often pay tips to waiters and artistes who often are employees of a certain organisation. Is this income by way of tips taxed as income from ‘Salary’?

In the hospitality and entertainment Industry, customers often pay tips to waiters and artistes who often are employees of a certain organisation. Is this income by way of tips taxed as income from ‘Salary’?

No, since the basic ingredients of employer-employee relationships are missing in this scenario. The income from tips is not to be taxed as income from Salary but is to be taxed as income from other sources. However, if these tips are paid by an Employer to an Employee, then this income is to be taxed as Income from ‘Salary’.