DEDUCTIONS U/S 16 OF THE ACT FROM THE INCOME FROM SALARIES
Generally Salaried Taxpayee Deduct only Professional Tax from his Salary while submitting Annual Income Tax Return of every Year. There are Two Deductions u/s. 16 which claims Salaried Employee from his Salary Income i.e. Entertainment Allowance and Professional Tax. The maximum Limit of Entertainment Allowance exemption is Rs. 5000 even if salaried taxpayee get more than it. The details are as under:
Entertainment Allowance
A deduction is also allowed under section 16(ii) 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. No deduction on account of entertainment allowance is available to non-government employees.
Tax on Employment
The tax on employment (Professional Tax) within the meaning of article 276(2) of the Constitution of India, leviable by or under any law, shall also be allowed as a deduction in computing the income under the head "Salaries". It may be clarified that “Standard Deduction” from gross salary income, which was being allowed up to financial year 2004-05 is not allowable from financial year 2005-06 onwards.
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