Published Paper Details:

Deductions to the salaried taxpayers extended under section 16 of the Income Tax Act, 1961 have been there since the foundation of the income tax act. The reason for the same could be the existence of the salaried class in huge number since then. These deductions exist to extend some income tax relief only to the salaried class. Though there have been several amendments in this section, the benefit that it actually extends to such taxpayers is really a matter of probe. The reason is that the maximum amount of deduction under this section if all the required conditions are fulfilled, comes to Rs. 57,500 for a government employee (Rs. 50,000 of standard deduction, Rs. 5,000 on entertainment allowance and Rs, 2,500 on professional tax) while it comes to Rs. 52,500 a non-government employee (Rs. 50,000 of standard deduction and Rs, 2,500 on professional tax). This paper, thus, makes an attempt to critically examine the deductions available under section 16 of the Income Tax Act, 1961 to the salaried class and also make a few suggestions in the said section.