16.Deductions from salaries.

The income chargeable under the head "Salaries" shall be computed after making the following deductions, namely:-

(i) in the case of an assessee whose income from salary, before allowing a deduction under this clause,--

(A) does not exceed one lakh rupees, a deduction of a sum equal to thirty-three and one-third per cent. of the salary or thirty thousand rupees, whichever is less;

(B) exceeds one lakh fifty rupees but does not exceed three lakh rupees, a deduction of a sum of twenty five thousand rupees.

(C) exceeds three lakh rupees but does not exceed five lakh rupees, a deduction of a sum of twenty thousand rupees.

The following clause (i) shall be substituted for the existing clause (i) of section 16 by the Finance Act, 2003, w.e.f. 1-4-2004:

(i) in the case of an assessee whose income from salary, before allowing a deduction under this clause,-

(A) does not exceed five lakh rupees, a deduction of a sum equal to forty per cent of the salary or thirty thousand rupees, whichever is less;

(B) exceeds five lakh rupees, a deduction of a sum of twenty thousand rupees;

(ii) a deduction in respect of any allowance in the nature of an entertainment allowance specifically granted to the assessee who is in receipt of a salary from the Government, a sum equal to one fifth of his salary (exclusive of any allowance, benefit or other perquisite) or five thousand rupees, whichever is less;

(iii) a deduction of any sum paid by the assessee on account of a tax on employment within the meaning of clause (2) of article 276 of the Constitution, leviable by or under any law.