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Dear friend, Section 16 - deduction from salary income The income chargeable under the head "salaries" is computed after making the following deductions: **1) Entertainment allowance:-** For govt employees- the deduction is least of the following:- a) actual amount received during the year b) 20% of salary c) 5,000 **2) Professional tax**:-Any amount paid by the employee shall be allowed as deduction in the year of payment . If professional tax of employee is paid by the employer then first it shall be included in the gross salary of all employee and then deduction shall be allowed u/s

Hie Gunesh, Section 16 - deduction from salary income ----------------------------------------- The income chargeable under the head "salaries" is computed after making the following deductions: 1) Standard deduction 2) Entertainment allowance 3) Professional tax 1) **Standard deduction** - Deleted by Finance Act 2005 2) **Entertainment allowance -** For govt employees- the deduction is least of the following:- a) actual amount received during the year b) 20% of salary c) 5,000 3) **Professional tax** - Any amount paid by the employee shall be allowed as deduction in the year of payment . If professional tax of employee is paid by the employer then first it shall be included in the gross salary of all employee and then deduction shall be allowed u/s

**Salary is taxed after allowing the following deductions under section 16 (ii) and (iii); viz.** **1) Entertainment Allowance – Section 16 (ii)** -: a deduction in respect of any allowance in the nature of an entertainment allowance specifically granted by an employer to the assessee 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. **2) Professional Tax – Section 16 (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. THANKS....

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