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 by the Finance Act, 2005, w.e.f. 1-4-2006. Prior to its omission, clause (i) as substituted by the Finance Act, 2001, w.e.f. 1-4-2002 and Finance Act, 2003, w.e.f. 1-4-2004, 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 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; 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, Finance (No. 2) Act, 1996, w.e.f. 1-4-1997, Finance Act, 1997, w.e.f. 1-4-1998 and Finance (No. 2) Act, 1998, w.e.f. 1-4-1999. 2. Substituted by the Finance Act, 2001, w.e.f. 1-4-2002. Earlier 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, Finance Act, 1997, w.e.f. 1-4-1998 and Finance (No. 2) Act, 1998, w.e.f. 1-4-1999. 3. Inserted by the Finance Act, 1989, w.e.f. 1-4-1990. Earlier, it was omitted by the Finance Act, 1974, w.e.f. 1-4-1975. 4. Omitted by the Finance Act, 1974, w.e.f. 1-4-1975. Earlier, clause (iv) was substituted/amended by the Finance Act, 1968, w.e.f. 1-4-1968, the Finance Act, 1969, w.e.f. 1-4-1970, the Finance Act, 1970, w.e.f. 1-4-1971 and the Finance (No. 2) Act, 1971, w.e.f. 1-4-1972. 5. Omitted by the Finance Act, 1974, w.e.f. 1-4-1975. 6. Inserted vide THE FINANCE ACT, 2018 w.e.f. 1st day of April, 2019 7. Substituted vide 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