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Tax on Employment (Profession Tax) [Section 16(iii)]

Where an employee has paid tax on employment under the relevant State Law, the tax so paid or recovered from his salary is deductible from his gross salary income. The deduction is available in the year in which the tax is actually paid by the employee.

Perquisites - is gain or profit incidentally made from employment in addition to regular salary or wages. It is defined in section 17(2) of the Act. Perquisites can be broadly divided in following three categories:
  • Rent-free accommodation -section 17(2)(i)
  • Concession in rent –section 17(2)(ii)
  • Benefit or amenity given to a specified employee-section 17(2)(iii). The valuation of perquisites is provided in Rule 3 of the Income tax Rules. With effect from A.Y. 2006-07 the Fringe Benefits prescribed for the purpose of Section 17(2)
  • exclude the Fringe Benefits chargeable to tax under Chapter XII-H. The Fringe benefits prescribed u/s 17(2)
  • include -
  • interest free or concessional loan.
  • Use of movable asset
  • Transfer of movable asset.
Maximum amount under article 276(2): As per article 276(2) of the constitution ,State Govt , municipality or other authority which is authorized under article 276(2) can impose professional tax on employment from a person maximum up to 2500/year.

Maximum amount under article 276(2): As per article 276(2) of the constitution ,State Govt , municipality or other authority which is authorized under article 276(2) can impose professional tax on employment from a person maximum up to 2500/year.

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