Entertainment Allowance u/s 16(ii)
Channel: DR. USHA CHAHAL
Date: 2020-07-20

Entertainment allowance comes under the head “Salaries”. Entertainment is an allowance which is given by employer to his/her  employees. Employees incur expenditure on the entertainment of visitors. For this, an employee is given a fixed amount of allowance every month to meet such type of expenses. Firstly, this amount shall be included in salary and out of Gross Total Income, a deduction u/s 16(ii) shall be allowed.  Least of the following shall be allowed as deduction u/s 16(ii):
a) Statutory Limit of ₹ 5000;
b) 20% of Basic Salary;
c) Actual Amount of Entertainment allowance received.