In this article, we will discuss the Entertainment Allowance under section 16(ii) of the Income Tax Act, 1961.
Write short note: Entertainment allowance u/s 16 (ii)
Entertainment allowance u/s 16(ii)
Such allowance shall be included as salary in full. After computing gross income from salaries a deduction shall be allowed under section 16(ii). This deduction is not available to non-Government employees (i.e. employees of private sector).
If such allowance is granted to a Government-employee, an amount equal to the least of the following alternative sums will be allowed as deduction under section 16(ii):
(a) Actual entertainment allowance granted during the previous year;
(b) 1/5th of basic salary of the employee;
(c) ₹ 5,000
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Entertainment allowance u/s 16 (ii)
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Some relevant points:
The following points are considered useful for the purpose of the above exemption:
- Deduction not available to non-Government employees: No deduction under this section is available to non-Government employees from the assessment year 2002-03.
- Actual expenditure not relevant: Exemption under this section does not depend on whether or not the employee incurs any expenditure for which such allowance is granted.
- If the employee exercises option under section 115BAC: In such a case, exemption under this section is not available.
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