INCOME FROM SALARY- DEDUCTION UNDER SECTION 16

 

DEDUCTION U/S 16

1.Standard Deduction (Section 16(ia)):

        i.            Under Old Regime

            Rs.50,000

      ii.            Under New Regime

Rs.75, 000

 2. Entertainment Allowance (Section 16(ii)): 

Entertainment allowance received by an employee is fully taxable and is initially included in the salary. Subsequently, the following deduction is to be made from gross salary:

However, deduction in respect of entertainment allowance is available in the case of Government employees only. The amount of deduction will be lower of:

(i) 1/5th of his basic salary, or

 

(ii) Rs. 5,000, or

 

(iii) Entertainment allowance received.

 Note: Deduction in respect of entertainment allowance is only available if a person opts for the old tax regime.

3.Professional Tax (Section 16(iii)):

Professional tax, a levy by your state government, can be deducted from your taxable income. But there are two key things to remember:

Ø  You can only deduct the tax you actually paid in the previous year, and

Ø  There's a cap of Rs. 2,500 per person annually.

         Note: Deduction in respect of professional tax is only available if a person opts for the

            old tax regime.

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