The deduction for entertainment allowance is available to
Aall salaried employees
Bgovernment employees
Conly company directors
Dself employed professionals
Answer & Solution
Correct answer: B. government employees
1. Not every deduction under section 16 is open to every employee.
2. The entertainment allowance deduction is set out for a government employee.
3. It applies where the assessee exercises the option of shifting out of the default tax regime.
4. A non government employee therefore gets no deduction for entertainment allowance.
5. A self employed person has no salary income at all, so section 16 cannot apply.
_Source: ICAI Income Tax Law, Ch3 'Heads of Income', Unit 1 'Salaries', section 1.4_
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