Deductions from salaries.

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

1[(i) 2[a deduction of] *[a sum calculated on the basis provided hereunder, namely :—

(a) where the salary 3[***] does not exceed Rs. 10,000

20 per cent of such salary ;

(b) where the salary 3[***] exceeds Rs. 10,000 Rs. 2,000 plus 10 per cent of the amount by which such salary exceeds Rs. 10,000
Or
Rs. 3,500, whichever is less ;]

*For the words within square brackets, the following shall be substituted by the Finance Act, 1981, w.e.f. 1-4-1982 :

"a sum equal to twenty per cent of the salary or five thousand rupees, whichever is less :"

Provided that—

4[(i) where the assessee is in receipt of a conveyance allowance from his employer ; or]

(ii) where any motor-car, motor-cycle, scooter or other moped is provided to the assessee by his employer for use by the assessee, otherwise than wholly and exclusively in the performance of his duties ; or

(iii) where one or more motor-cars are owned or hired by the employer of the assessee and the assessee is allowed the use of such motorcar or all or any of such motor-cars, otherwise than wholly and exclusively in the performance of his duties,

the deduction under this clause shall not exceed one thousand rupees ;]

(ii) 5[a deduction] in respect of any allowance in the nature of an entertainment allowance specifically granted to the assessee by his employer—

(a) in the case of an 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 ; and

(b) in the case of any other assessee who is in receipt of such entertainment allowance and has been continuously in receipt of such entertainment allowance regularly from his present employer from a date before the 1st day of April, 1955, the amount of such entertainment allowance regularly received by the assessee from his present employer in any previous year ending before the 1st day of April, 1955, or a sum equal to one-fifth of his salary (exclusive of any allowance, benefit or other perquisite) or seven thousand five hundred rupees, whichever is the least;

(iii) to (iv) [Omitted by the Finance Act, 1974, w.e.f. 1-4-1975. Earlier they were amended by the Finance Act, 1968, w.e.f. 1-4-1968, Finance Act, 1969, w.e.f. 1-4-1970, Finance Act, 1970, w.e.f. 1-4-1971 and Finance (No. 2) Act, 1971, w.e.f. 1-4-1972.]

 

1. Substituted by the Finance Act, 1974, w.e.f. 1-4-1975.

2. Substituted for "in respect of expenditure incidental to the employment of the assessee", by the Finance (No. 2) Act, 1980, w.e.f. 1-4-1981.

3. "derived from such employment" omitted by the Finance (No. 2) Act, 1980, w.e.f. 1-4-1981.

4. clause (i) of proviso shall be omitted by the Finance Act, 1981, w.e.f. 1-4-1982.

5. Inserted by the Finance (No. 2) Act, 1980, w.e.f. 1-4-1981.

Notes on current amendment - The effect of amenmdent made in section 16 (i) by the Finance Act, 1981 has been that the standard deduction at all levels of salaried employees has been increased to 20 per cent of salary income subject to an overall ceiling limit of Rs. 5,000. The standard deduction will not now be limited to Rs. 1,000 in the case of employees in receipt of conveyance allowance.

 

 

[As amended by the Finance Act, 1981]