Section 16 - Deductions from salaries - Income-tax Act, 1961

Deductions from salaries. 16. The income chargeable under the head Salaries shall be computed after making the following deductions, namely :- ( i ) 1 [ *** ] 6 [ (ia) a deduction of 7 [ fifty thousand ] rupees or the amount of the salary, whichever is less; ] 8 [Provided that in a case where income-tax is computed under clause (ii) of sub-section (1A) of section 115BAC, the provisions of this clause shall have effect as if for the words fifty thousand rupees , the words seventy-five thousand rupees had been substituted; ] 2 [ ( 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; ] 3 [ ( 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. ] ( iv ) 4 [ *** ] ( v ) 5 [ *** ] ***************** NOTES:- 1. Omitted vide Section 6 of the Finance Act, 2005 w.e.f. 01-04-2006 before it was read as, (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; And was Amended vide Section 4 of the Finance Act, 1974 w.e.f. 01-04-1975 And was Amended vide Section 5 of the Finance (No. 2) Act, 1980 w.e.f. 01-04-1981 And was Amended vide Section 4 of the Finance Act, 1981 w.e.f. 01-04-1982 And was Amended vide Section 6 of the Finance Act, 1982 w.e.f. 01-04-1983 And was Amended vide Section 8 of the Finance Act, 1983 w.e.f. 01-04-1984 And was Amended vide Section 6 of the Taxation Laws (Amendment) Act, 1984 w.e.f. 01-04-1975 And was Amended vide Section 5 of the Finance Act, 1985 w.e.f. 01-04-1986 And was Amended vide Section 4 of the Finance Act, 1986 w.e.f. 01-04-1987 And was Amended vide Section 9 of the Finance Act, 1988 w.e.f. 01-04-1989 And was Amended vide Section 5 of the Finance Act, 1989 w.e.f. 01-04-1990 And was Amended vide Section 7 of the Finance Act, 1992 w.e.f. 01-04-1993 And was Amended vide Section 7 of the Finance Act, 1993 w.e.f. 01-04-1994 And was Amended vide Section 7 of the Finance (No. 2) Act, 1996 w.e.f. 01-04-1997 And was Amended vide Section 4 of the Finance Act, 1997 w.e.f. 01-04-1998 And was Amended vide Section 6 of the Finance (No. 2) Act, 1998 w.e.f. 01-04-1999 And was Amended vide Section 12 of the Finance Act, 2001 w.e.f. 01-04-2002 And was Amended vide Section 13 of the Finance Act, 2003 w.e.f. 01-04-2004 2. Substituted vide Section 12 of the Finance Act, 2001 w.e.f. 01-04-2002 before it was read as, (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; Earlier, Amended vide Section 7 of the Finance (No. 2) Act, 1996 w.e.f. 1-4-1997 And was Amended vide Section 5 of the Finance (No. 2) Act, 1980 w.e.f. 01-04-1981 And was Amended vide Section 4 of the Finance Act, 1997 w.e.f. 01-04-1998 And was Amended vide Section 6 of the Finance (No. 2) Act, 1998 w.e.f. 01-04-1999 3. Inserted vide Section 5 of the Finance Act, 1989 w.e.f. 01-04-1990 Earlier , Omitted vide Section 4 of the Finance Act, 1974 w.e.f. 01-04-1975 before it was read as, (iii) any amount paid by the assessee in respect of taxes on professions, trades, callings or employments levied under any State or Provincial Act; 4. Omitted vide Section 4 of the Finance Act, 1974 w.e.f. 01-04-1975 before it was read as, (iv) where the assessee is not in receipt of a conveyance allowance, whether as such or as part of his salary, in respect of expenditure on traveling for the purposes of his employment, a sum calculated in respect of each calendar month or part thereof comprised in the period of his employment during the previous year, on the basis provided hereunder, namely :- (a) where the assessee owns a motor car which is used for the purposes of his employment Rs. 200; (b) where the assessee owns a motor cycle, scooter or other moped which is used for the purposes of his employment Rs. 75; (c) in any other case Rs. 50; Earlier , Amended vide Third Schedule of the Finance Act, 1968 w.e.f. 01-04-1968 And was Amended vide Section 4 of the Finance Act, 1969 w.e.f. 01-04-1970 And was Amended vide Section 7 of the Finance Act, 1970 w.e.f. 01-04-1971 And was Amended vide Section 7 of the Finance (No. 2) Act, 1971 w.e.f. 01-04-1972 5. Omitted vide Section 4 of the Finance Act, 1974 w.e.f. 01-04-1975 before it was read as, (v) any amount actually expended by the assessee, not being an amount expended on the purchase of books or other publications, or on entertainment or on the maintenance of a conveyance, which, by the conditions of his service, he is required to spend out of his remuneration wholly, necessarily and exclusively in the performance of his duties. 6. Inserted vide Section 7 of the Finance Act, 2018 w.e.f. 01-04-2019 7. Substituted vide Section 3 of the Finance Act, 2019 w.e.f 01-04-2020 before it was read as, forty thousand 8. Inserted vide Section 10 of the Finance (No. 2) Act, 2024 dated 16-08-2024 w.e.f. 01-04-2025