Section 19 — Deductions from salaries

(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.
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.
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.
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);
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—
( A) the service of the workman has been interrupted by such
transfer; or
( B) the terms and conditions of service applicable to the work -
man after such transfer are in any way less favourable to the
workman than those applicable to him immediately before
such transfer; or
( C) the new employer is, under the terms of such transfer or
otherwise, legally not liable to pay to the workman, in the
event of his retrenchment or compensation on the basis that
his service has been continuous and has not been interrupted
by such transfer;
( d) in respect of the entries against serial numbers 10 and 11 thereof, the
expressions “employer” and “workman” shall have the same meanings
as respectively assigned to them in the Industrial Disputes Act, 1947
(14 of 1947);
( e) the provisions of the entries against serial number 12 thereof shall be
subject to the following conditions:—
( i) the applicable schemes of the said companies or authorities or
societies or Universities or the institutes referred to in clauses
(h)(vii) and (x), governing the payment of such amount are made
as per such guidelines (including, inter alia, criteria of economic
viability) as may be issued in this behalf;
( ii) where deduction has been allowed to an employee in respect of the
said item for any tax year, no deduction thereunder shall be allowed
to him in relation to any other tax year; and
( iii) where any relief under section 157 has been allowed to an
assessee for any tax year in respect of any amount referred to in the
said item, such amount shall not be allowed as a deduction from
the compensation received or receivable in any tax year;
( f) in respect of the entries against serial number 14 thereof, if any payment
on account of cash equivalent of leave salary is received from one or
more than one employer in the same tax year (whether or not any such
payment or payments 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 payment or payments which was
received in any one or more earlier tax years and allowed as an ex-
emption or a deduction (whether whole or part) from total income
of any such tax year or years;
( g) the death-cum-retirement gratuity referred to in sub-section (1) (Table:
Sl. No. 3) shall be as—
( A) received under the revised pension rules of the Central Government,
or the Central Civil Services (Pension) Rules, 2021; or
( B) received under any similar scheme applicable—
( i) to the members of the civil services of the Union or holders
of posts connected with defence or of civil posts under the
Union (such members or holders being persons not governed
by the said rules);
( ii) to the members of the all-India services;
( iii) to the members of the civil services of a State or holders of
civil posts under a State; or
( iv) to the employees of a local authority;
( h) the schemes of voluntary retirement or termination of service as referred
to in sub-section (1) (Table: Sl. No. 12) shall be for the employees of—
( i) a public sector company (under a scheme of voluntary separation);
or
( ii) any other company; or
( iii) an authority established under a Central Act or State Act or Pro -
vincial Act; or
( iv) a local authority; or
( v) a co-operative society; or
( vi) a University established or incorporated by or under a Central Act
or State Act or Provincial Act and an institution declared to be a
University under section 3 of the University Grants Commission
Act, 1956 (3 of 1956); or
( vii) an Indian Institute of Technology within the meaning of section
3(g) of the Institutes of Technology Act, 1961 (59 of 1961); or
( viii) the Central or any State Government; or
( ix) an institution, having importance throughout India or in any State
or States, as the Central Government may, by notification, specify
in this behalf; or
( x) such institute of management, as the Central Government may, by
notification, specify in this behalf.
C.—Income from house property