The Central Board of Direct Taxes (CBDT) on Thursday announced that the Finance Act, 2018 has amended Section 16 of the Income Tax Act, 1961.
The new provision states that a taxpayer having income chargeable under the head ‘Salaries’ shall be allowed a deduction of Rs. 40,000 or the amount of salary, whichever is less, for computing his taxable income.
Representations have been received seeking clarification as to whether a taxpayer, who receives a pension from his former employer, shall also be eligible to claim this deduction.
The pension received by a taxpayer from his former employer is taxable under the head ‘Salaries’.
Accordingly, any taxpayer who is in receipt of the pension from his former employer shall be entitled to claim a deduction of Rs. 40,000 or the amount of pension, whichever is less, under Section 16 of the Act.(Minimal edits applied, story generated from syndicated ANI feed)