Central Board of Direct Taxes amends Section 16 of Income Tax Act
![Any taxpayer who is in receipt of pension from his former employer shall be entitled to claim a deduction of Rs 40,000. Any taxpayer who is in receipt of pension from his former employer shall be entitled to claim a deduction of Rs 40,000.](https://s3.ap-southeast-1.amazonaws.com/images.asianage.com/images/aa-Cover-egmvperc95mqml0ue3upu0nv50-20180405143559.Medi.jpeg)
New Delhi: 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 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 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.