Deductions are items which are reduced from Taxable Salary to arrive at Income from Salaries

Taxabie Salary

Less

Deductions

=Income from Salary

 

For Computing Income from Salaries.

  1. First we add all Taxable Allowances and Perquisites
  2. Then we Calculate Deductions under Section 16 to arrive at Income from Salaries

        Step 1 - Step 2 is Income from Salaries

 

There are basically 2 deductions

  1. Entertainment Allowance [ Section 16(ii)]
  2. Professional Tax [ Section 16(iii)]

Both these are reduced to arrive at Income from Salary

 

Format

Particulars Amt. received Exempt Taxable
Basic Salary xx xx xx
+Taxable Allowance xx xx xx
+Taxable Perquisites xx   xx
Gross Taxable Salary     xx
Less      
Deductions      
Entertainment Allowance     xx
Professional Tax     xx
Income from Salary     xx

  Lets study these 2 deductions one by one

  1. Income Tax
  2. Income from Salaries
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Davneet Singh
Davneet Singh is a graduate from Indian Institute of Technology, Kanpur. He has been teaching from the past 8 years. He provides courses for Maths and Science at Teachoo. You can check his NCERT Solutions from Class 6 to 12.