Deduction for entertainment allowance and professional tax is allowable
Aonly under the default tax regime
Bunder both regimes without limit
Conly under the optional tax regime
Dunder neither of the two regimes
Answer & Solution
Correct answer: C. only under the optional tax regime
1. Two regimes exist, the default under section 115BAC and the optional one.
2. Deduction for entertainment allowance for government employees and for professional tax is allowable only under the optional regime.
3. That means the employee must exercise the option of shifting out of the default regime.
4. The same deductions are not allowable under the default regime.
5. Answering without naming the regime is what makes most attempts wrong here.
_Source: ICAI Income Tax Law, Ch3 'Heads of Income', Unit 1 'Salaries', section 1.4_
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