What deductions are allowed for salary income under the Income Tax Act?

Under Section 16 of the Income Tax Act, 1961, certain deductions are allowed from salary income. These include standard deduction of Rs. 50,000, entertainment allowance, professional tax, and deductions for provident fund contributions, life insurance premiums, housing loan interest, and other specified investments under Section 80C. Note: Finance Act 2025 has increased the standard deduction limit to Rs. 75,000 from FY 2025-26. Supporting Case Law: Dharampal Premchand Ltd. v. CIT (2015) – Supreme Court – (2015) 7 SCC 866 – Held that deductions under Sections 16 and 80C must be allowed if conditions are fulfilled. Current Status: These provisions are currently in force and not under litigation.