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Allowable deduction from salary as per section 16 of IT Act

Deductions from Salary as per section 16 of Income Tax Act. eligibility, limit, ITR filing, u/s 115BAC

Section 16 of the Income Tax Act allows taxpayers to claim a deduction from salary: u/s 16(ia), u/s 16(ii), and u/s 16(iii) from Income from Salaries.

deductions under section 16 from salaries
SectionEligible taxpayersAllowable deduction from salaryITR FilingTaxpayer filing ITR u/s 115BAC
16(ia)  Individuals – Salaried employee and Pensioners(i) Rs.50,000/- [w.e.f 1st April 2020, earlier to this period deduction of Rs.40,000/- was allowed u/s 16(ia)]

or

(ii) the amount of Salary (Salary includes Pension received during the previous financial year)

[whichever is less]

Taxpayer has to enter the standard deduction admissible u/s 16(ia) as per Part B of Form 16  No deduction available to the assessee.
16(ii)Government Employees(i) 20% or 1/5 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 of his salary excluding any allowance, benefit or other perquisite.  

Or  

(ii) Actual, Maximum up to Rs.5,000/-

[whichever is less]
Taxpayer has to enter the standard deduction admissible u/s 16(ii) as per Part B of Form 16  No deduction available to the assessee.
16(iii)Salaried taxpayersA deduction of any sum paid by the taxpayer 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.Taxpayer has to enter the standard deduction admissible u/s 16(ii) as per Part B of Form 16  No deduction available to the assessee.

Filing of ITR under the seventh proviso to section 139(1)

Income chargeable to tax under the head salaries includes:

  1. Gross Salary [(including provisions contained in section 7(1), the value of perquisites u/s 17(2), profit in lieu of salary u/s 17(3)]
  2. Allowances to the extend exempt u/s 10.
  3. Deduction’s u/s 16

Income Tax Computation Normal Provisions vs New Tax Regime u/s 115BAC

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