The salary break up of a government employee slightly differs to that of a private sector personnel. A government employees salary is a break up of gross income, house rent allowance, dearness allowance, travelling allowance, provident fund and taxes. There are also benefits like pensions, arrears and incentives.
Interestingly, the Income Tax Department also allows its employees to claim entertainment allowance under section 16(ii). Though, this allowance is fully taxable for private sector workers, and is only meant for central and state government employees.
An entertainment allowance is a sum given by employer, to their employees for their expense in meals, hotels, drinks and even in movies. As per section 16(ii), a deduction in respect of any allowances in the nature of entertainment specifically granted by an employer to the assessee who is in receipt of a salary from the government.
The sum which is equal to one-fifth of his or her salary, or Rs 5,000 whichever is less allowed for deduction. It is exclusive of any allowance, benefit or other perquisite. One-fifth i.e. 20% of gross salary. Also an individual can claim their deductions from salary under section 16 including entertainment allowances, while filing their Income Tax Return (ITR) which needs to be filed in ITR form1. Likewise in form 16.
The form has the evidence of TDS which is deducted from your salary and deposited with authorities. Issued annually on or before June 15 of every year, the Form contains information needed to file your ITR.
Now, the deadline for ITR filing is close by on July 31, 2019. Government employees must make sure that they have included deductions in entertainment allowances.
