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Entertainment Allowance - Professional Tax - Section 16(ii) and 16(iii) - Salary Income - Income Tax

Entertainment Allowance - Professional Tax - Section 16(ii) and 16(iii)
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 Sec. 16(ii): ENTERTAINMENT ALLOWANCE

Deduction allowable to Govt. employees only to the extent of the least of the following:

  • 5,000
  • 20% of Salary exclusive of any allowance, benefit or other perqisite
  • Actual entertainment allowance received for the previous year

Note: In case of entertainment allowance the assessee is not entitled to any exemption but he is entitled to a deduction u/s 16(ii). Therefore the entire entertainment allowance is added in the computation of gross salary and then the Government employee is entitled to deduction from gross salary.

Sec. 16(iii): PROFESSIONAL TAX

  • If paid by Employee – Deduction is allowed from Gross Salary
  • If paid by Employer – Tax so paid should be included in gross salary as perquisite & then deduction can be claimed from Gross Salary.
 
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