CA Aashish Ramchand
The provisions regarding the entertainment allowance and its deduction from salary are discussed below –
Entertainment allowance as per Section 16(ii) is first included in salary income under the head “Salaries” and thereafter a deduction is given on the basis enumerated in the following points:
A. In the case of a Government employee (i.e., Central Government or a State Government employee), the least of the following is deductible:
1. 5,000
2. 20 percent of basic salary ; or
3. Amount of entertainment allowance granted during the previous year.
In order to determine amount of entertainment allowance deductible from salary Income, the following points need consideration:
1. For this purpose “salary” excludes any allowance, benefit or other perquisites.
2. Amount actually expended towards entertainment (out of entertainment allowance received) is not taken into consideration.
In the case of a non-Governmental employee (including employees of statutory corporation and local authority), entertainment allowances is not deductible, and are completely chargeable to tax.
(Author is CA by profession & Co-Founder of Make My Returns (www.makemyreturns.com) & can be reached at connect@makemyreturns.com)
Also Read:
- https://taxguru.in/income-tax/salary-allowances-exemption-depend-expenditure.html
- https://taxguru.in/income-tax/most-popular-exempt-allowances-for-salaried-employees.html
(Republished With Amendments)
what about entertainment allowance in case of government employee but just for 9 months…?
will the exemption be like
1 actual amount
2. statutory limit 5000*9/12
3. 20%of salary
??????
I am state govt servent salare above 50000 per month but not recived entertainment allowance . I want exemption per year as per rule .proper gide 5000 per month / year or 20 % of basic saleri or only granted of entertainment allowance or recived please repli
I am a central government employee salary about 100000 but not getting entertainment allowance. Whether I am eligible for exemption of entertainment allowance of Rs. 5000.
my relative state govt sevent salare above 1200000 but not recived entertainment allowance . he want exemption per year as per rule .proper gide 5000 per month / year or 20 % of basic saleri or only grented of entertainment allowance or recived please repli
Employee of Indian railways is eligible for deduction under section 16(ii)
Its really very helpful…????
Kindly let me know how much an employee claim as deduction from salary for the following exps assuming a Co includes these as part of salary
Petrol
Food
Entertainment
Mobile bills
Books and periodicals
I shall be thankful if you could e mail your answers
Best Regards
k.kumar
Sr.Accountant
Menorah Group
Mumbai
Does salary for treatment of entertainment allowance includes commission on net sales?
no it includes just basic salary excluding of DA(enters) and commission on turnover
Sir can I get Rs 5000 deduction even there is no allowance paid as entrainment allowance. I am working in gov service