Which type of allowance qualifies for deduction under Section 16(ii) of the Income-tax Act, 1961?
Explanation & Strategy
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Under Section 16(ii) of the Income Tax Act, entertainment allowance deduction is available ONLY to government employees (not private sector). The deduction is the least of: actual entertainment allowance, 1/5th of basic salary, or Rs.5,000. Private company allowances like HRA (S.10(13A)), transport, or LTA don't qualify under S.16(ii).
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