Section - 16

Deductions from salaries

Deductions from salaries.

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

²³ [(i ) in the case of an assessee whose income from salary, before allowing a deduction under this clause,—

(A ) does not exceed one lakh fifty thousand 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 thousand 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;

(ii ) a deduction in respect of any allowance in the nature of an entertainment allowance specifically granted by an employer 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;]

²⁴ [(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 276²⁵ of the Constitution, leviable by or under any law.]

( iv) ²⁶[***]

( v) ²⁷[***]

23. Clauses (i) and (ii ) substituted by the Finance Act, 2001, w.e.f. 1-4-2002 . Prior to their substitution, clauses (i) and ( ii), as amended by the Finance (No. 2) Act, 1998, w.e.f. 1-4-1999 and, Finance Act, 1997, w.e.f. 1-4-1998, read as under :

"(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 twenty-five thousand rupees, whichever is less;

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

Explanation.—For the purposes of this clause, where salary is due from, or paid or allowed by, more than one employer, the deduction under this clause shall be computed with reference to the aggregate salary due, paid or allowed to the assessee and shall in no case exceed the amount specified under this clause;

(ii) 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;"

Earlier clause (i) was amended by the Finance Act, 1974, w.e.f. 1-4-1975, Finance (No. 2) Act, 1980, w.e.f. 1-4-1981, Finance Act, 1981, w.e.f. 1-4-1982, Finance Act, 1982, w.e.f. 1-4-1983, Finance Act, 1983, w.e.f. 1-4-1984, Taxation Laws (Amendment) Act, 1984, w.r.e.f. 1-4-1975, Finance Act, 1985, w.e.f. 1-4-1986, Finance Act, 1986, w.e.f. 1-4-1987, Finance Act, 1988, w.e.f. 1-4-1989, Finance Act, 1989, w.e.f. 1-4-1990, Finance Act, 1992, w.e.f. 1-4-1993, Finance Act, 1993, w.e.f. 1-4-1994 and Finance (No. 2) Act, 1996, w.e.f. 1-4-1997, clause (ia) was inserted by the Finance (No. 2) Act, 1996, w.e.f. 1-4-1997 and clause (ii) was amended by the Finance (No. 2) Act, 1980, w.e.f. 1-4-1981.

Section 16

Deductions from salaries

Footnotes