Income Tax Act, 2025
Section 5: Ins. by Act 20 of 2002, s. 10 (w.e.f. 112001).
5. Ins. by Act 20 of 2002, s. 10 (w.e.f. 112001).
139
(c) any arrears of salary paid or allowed to him in the previous year by or on behalf of an
employer or a former employer, if not charged to income-tax for any earlier previous year.
Explanation 1[1.]—For the removal of doubts, it is hereby declared that where any salary paid in
advance is included in the total income of any person for any previous year it shall not be included again
in the total income of the person when the salary becomes due.
2[Explanation 2.—Any salary, bonus, commission or remuneration, by whatever name called, due to,
or received by, a partner of a firm from the firm shall not be regarded as “salary” for the purposes of this
section.]
16. Deductions from salaries.—The income chargeable under the head “Salaries” shall be computed
after making the following deductions, namely:—
3[4* * * * *
5[(ia) a deduction of 6[fifty thousand] rupees or the amount of the salary, whichever is less;]
(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;]
7[(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.]
8* * * * *
17. “Salary”, “perquisite” and “profits in lieu of salary” defined.—For the purposes of
sections 15 and 16 and of this section,—
(1) “salary” includes—
(i) wages;
(ii) any annuity or pension;
(iii) any gratuity;
(iv) any fees, commissions, perquisites or profits in lieu of or in addition to any salary or
wages;
(v) any advance of salary;
9[(va) any payment received by an employee in respect of any period of leave not availed of
by him;]
(vi) the annual accretion to the balance at the credit of an employee participating in a
recognised provident fund, to the extent to which it is chargeable to tax under rule 6 of Part A of
the Fourth Schedule;
(vii) the aggregate of all sums that are comprised in the transferred balance as referred to in
sub-rule (2) of rule 11 of Part A of the Fourth Schedule of an employee participating in a
recognised provident fund, to the extent to which it is chargeable to tax under sub-rule (4)
thereof; and
1. Explanation renumbered as Explanation 1 thereof by Act 18 of 1992, s. 6 (w.e.f. 11993).
2. Ins. by s. 6, ibid. (w.e.f. 11993). Earlier inserted by Act 4 of 1988, s. 8 (w.e.f. 11989) and later omitted by
Act 3 of 1989, s. 95 (w.e.f. 11989).
any arrears of salary paid or allowed to him in the previous year by or on behalf of an
employer or a former employer, if not charged to income-tax for any earlier previous year.
Explanation 1[1.]—For the removal of doubts, it is hereby declared that where any salary paid in
advance is included in the total income of any person for any previous year it shall not be included again
in the total income of the person when the salary becomes due.
2[Explanation 2.—Any salary, bonus, commission or remuneration, by whatever name called, due to,
or received by, a partner of a firm from the firm shall not be regarded as “salary” for the purposes of this
section.]
16. Deductions from salaries.—The income chargeable under the head “Salaries” shall be computed
after making the following deductions, namely:—
3[4* * * * *
5[
a deduction of 6[fifty thousand] rupees or the amount of the salary, whichever is less;]
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;]
7[
a deduction of any sum paid by the assessee on account of a tax on employment within the
meaning of clause
of article 276 of the Constitution, leviable by or under any law.]
8* * * * *
17. “Salary”, “perquisite” and “profits in lieu of salary” defined.—For the purposes of
sections 15 and 16 and of this section,—
“salary” includes—
wages;
any annuity or pension;
any gratuity;
any fees, commissions, perquisites or profits in lieu of or in addition to any salary or
wages;
any advance of salary;
9[
any payment received by an employee in respect of any period of leave not availed of
by him;]
the annual accretion to the balance at the credit of an employee participating in a
recognised provident fund, to the extent to which it is chargeable to tax under rule 6 of Part A of
the Fourth Schedule;
the aggregate of all sums that are comprised in the transferred balance as referred to in
sub-rule
of rule 11 of Part A of the Fourth Schedule of an employee participating in a
recognised provident fund, to the extent to which it is chargeable to tax under sub-rule
thereof; and
1. Explanation renumbered as Explanation 1 thereof by Act 18 of 1992, s. 6 (w.e.f. 11993).
2. Ins. by s. 6, ibid. (w.e.f. 11993). Earlier inserted by Act 4 of 1988, s. 8 (w.e.f. 11989) and later omitted by
Act 3 of 1989, s. 95 (w.e.f. 11989).