Income Tax Act

Official PDF pages 46–50

SOURCE PDF PAGE 46
( ii )   from a provident or other fund, to the extent to which it does not
consist of contributions by the assessee or interest on such contri -
butions; or
( iii )   any sum received under a Keyman insurance policy as defined in
Schedule II (Note 1), including the sum allocated by way of bonus
on such policy.
(2) The payment referred in sub-section (1)( c ) shall not include any payment referred
to in—
( a )   Schedule II (Table: Sl. No. 3);
( b )   Schedule II (Table: Sl. No. 4);
( c )   Schedule II (Table: Sl. No. 8); and
( d )   Schedule III (Table: Sl. No. 11).
Deductions from salaries.
19.   (1) The income chargeable under the head “Salaries” shall be computed
after making the deductions in respect of sums of the nature mentioned in
column B of the following Table, not exceeding the amount as mentioned in column
C thereof:—
TABLE
Sl.
No.
Nature of sum   Amount of deduction
A   B   C
1.   Sum   paid   by   the   assessee   as
a   tax   on   employment   as   per
article 276(2) of the Constitution,
leviable by or under any law.
Entire amount.
2.   Standard deduction.   ( a )   `   75000 or the salary, whichever is
less, where income-tax is computed
under section 202(1);
( b )   `   50000 or the salary, whichever is
less, in any other case.
3.   Death- cum -retirement gratuity
received as referred to in sub-
section (2)( g ).
Entire amount.
4.   Payment   of   retiring   gratuity
received under the Pension Code
or Regulations applicable to the
members of the defence services.
Entire amount.
5.   Gratuity   received   under   the
Payment of Gratuity Act, 1972
(39 of 1972).
Amount received, as restricted to the
amount calculated as per the provisions
of section 4(2) and (3) of the said Act.

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SOURCE PDF PAGE 47
Sl.
No.
Nature of sum   Amount of deduction
A   B   C
6.   Any other gratuity received by an
employee—
( i )   on his retirement; or
( ii )   on his becoming incapaci-
tated before such retire-
ment; or
( iii )   on   termination   of   his
employment.
Amount being minimum of—
( a )   actual gratuity received;
( b )   amount specified by the Central
Government,   by   notification,
having regard to the limit appli -
cable in this behalf to the employ -
ees of the Central Government;
and
( c )   half month’s salary for each com -
pleted year of service, calculated
as under:—
Amount =  
1  
(A × B)
2
where,—
A   =   average   salary   for   ten
months immediately preceding
the month when any such event
occurs;
B = number of such completed
years.
7.   Payment   in   commutation   of
pension received—
( a )   under the Civil Pensions
(Commutation) Rules of
the Central Government;
or
( b )   under any similar scheme
applicable to—
( i )   the members of the
civil services of the
Union   or   holders
of posts connected
with defence or of
civil posts under the
Union, [such mem -
bers or holders not
covered under ( a )];
( ii )   the members of the
all-India services;
( iii )   the members of the
defence services;
Entire amount.

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SOURCE PDF PAGE 48
Sl.
No.
Nature of sum   Amount of deduction
A   B   C
( iv )   the members of the
civil   services   of   a
State, or the holders
of civil posts under a
State; or
( v )   the employees of a
local authority or a
corporation   estab -
lished by a Central
Act or State Act or
Provincial Act.
8.   Payment   in   commutation   of
pension is received under any
scheme from any other employer.
The commuted value shall be deter-
mined having regard to the age of the
recipient, the state of his health, the
rate of interest and officially recognised
tables of mortality, and—
( a )   where the employee has received
gratuity, the commuted value of
one-third of the pension, which
he is normally entitled to receive;
and
( b )   in any other case, the commuted
value of one-half of such pension.
9.   Payment   in   commutation   of
pension received from a fund as
specified in Schedule VII (Table:
Sl. No. 3).
Entire amount.
10.   Compensation   received   by   a
workman   at   the   time   of   his
retrenchment—
( a )   under the Industrial Dis -
putes   Act,   1947   (14   of
1947); or
( b )   under any other Act or
rules, orders or notifica-
tions issued thereunder;
or
( c )   under any standing orders;
or
Minimum of—
( a )   compensation received;
( b )   amount   calculated   as   per
provisions of section 25F( b ) of
the Industrial Disputes Act, 1947
(14 of 1947);
( c )   such amount, not being less than
`   50000, as may be notified by
the Central Government.

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SOURCE PDF PAGE 49
Sl.
No.
Nature of sum   Amount of deduction
A   B   C
( d )   under any award, cont-
ract of service or other-
wise.
11.   In case of compensation referred
to in Sl. No. 10, where such
compensation   received   is   in
accordance   with   any   scheme
which the Central Government
may   approve   in   this   behalf,
having regard to—
( a )   the   need   for   extending
special   protection   to
the   workmen   in   the
undertaking   to   which
such scheme applies; and
( b )   other   relevant   circum-
stances.
Compensation received.
12.   Amount received or receivable
on   voluntary   retirement   or
termination of service under a
scheme or schemes of voluntary
retirement, by an employee as
referred to in sub-section (2)( h ).
Minimum of—
( a )   compensation received; and
( b )   `   500000.
13.   Payment received by an employee
of the Central Government or a
State Government as the cash
equivalent of the leave salary in
respect of the period of earned
leave at his credit at the time
of his retirement whether on
superannuation or otherwise.
Entire amount.
14.   Payment of the nature referred
against serial number 13 received
by an employee who is not a
Central   Government   or   State
Government employee.
Amount being minimum of—
( a )   the cash equivalent of the leave
salary in respect of the period of
earned leave at his credit at the
time of his retirement, whether
on superannuation or otherwise
(entitlement of earned leave shall
not exceed thirty days for every
year of actual service);

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SOURCE PDF PAGE 50
Sl.
No.
Nature of sum   Amount of deduction
A   B   C
( b )   amount “A”,
where,—
A=10   ×   B;
B = average monthly salary for
the   ten   months   immediately
preceding his retirement wheth -
er on superannuation or oth -
erwise;
( c )   amount as the Central Govern -
ment may, by notification, spec -
ify in this behalf having regard
to the limit applicable in this
behalf to the employees of that
Government; and
( d )   actual payment received.
(2) For the purposes of the Table referred to in sub-section (1),—
( a )   in respect of the entries against serial number 6 thereof, if gratuity or
gratuities was or were received from one or more than one employer in
the same tax year (whether or not any gratuity or gratuities was or were
received in any earlier tax year), the aggregate amount of deduction shall
not exceed—
A – B,
where,—
A = the limit specified by the Central Government, by notification; and
B = the aggregate amount of gratuity or gratuities which was or were
received in any one or more earlier tax years and allowed as an exemption
or a deduction (whether whole or part) from the total income of any such
tax year or years;
( b )   in respect of the entries against serial numbers 6 and 14 thereof, “Salary”
includes dearness allowance, if the terms of employment so provide, but
excludes all other allowances and perquisites;
( c )   in respect of the entries against serial numbers 10 and 11 thereof, the
following amounts shall be deemed to be compensation received at the
time of retrenchment:—
( i )   compensation received by a workman at the time of the closing
down of the undertaking in which he is employed;
( ii )   compensation received by a workman, at the time of the transfer
(whether by agreement or by operation of law) of the ownership or
management of the undertaking in which he is employed, from the
employer in relation to that undertaking to a new employer, if—