Section 16(iii) (New Regime)
Professional Tax & Entertainment Allowance Deductions Disallowed
Quick Answer
Section 16(iii) (New Regime) (Professional Tax & Entertainment Allowance Deductions Disallowed) has been deleted under the Income-tax Act, 2025, effective 1st April 2026.
What changed for Section 16(iii) (New Regime)
Under the Income Tax Act, 1961, Section 16(iii) (New Regime) governs professional tax & entertainment allowance deductions disallowed. Deductions allowed from salary for Professional Tax paid to state governments and Entertainment Allowance (for Govt employees).
When the Income-tax Act, 2025 takes effect on 1st April 2026, Section 16(iii) (New Regime) is deleted rather than renumbered. Not Applicable. While the Standard Deduction of Rs. 50,000 is retained, the specific deductions for Professional Tax and Entertainment Allowance are removed.
For Section 16(iii) (New Regime), the practical impact is rated Medium. Slight increase in taxable salary for employees in states levying high Professional Tax.
Sec 16(iii) (New Regime)
Provision Summary
Deductions allowed from salary for Professional Tax paid to state governments and Entertainment Allowance (for Govt employees).
Deleted
Provision Summary
Not Applicable. While the Standard Deduction of Rs. 50,000 is retained, the specific deductions for Professional Tax and Entertainment Allowance are removed.
Key Changes & Highlights
- State professional tax paid can no longer be deducted from federal taxable salary.
Related Sections
Frequently Asked Questions
What is Section 16(iii) (New Regime) of the Income Tax Act, 1961 about?
Section 16(iii) (New Regime) of the Income Tax Act, 1961 covers professional tax & entertainment allowance deductions disallowed. Deductions allowed from salary for Professional Tax paid to state governments and Entertainment Allowance (for Govt employees).
What happens to Section 16(iii) (New Regime) in the Income-tax Act, 2025?
Section 16(iii) (New Regime) has been deleted under the Income-tax Act, 2025, with no successor section carrying it forward from 1st April 2026. Not Applicable. While the Standard Deduction of Rs. 50,000 is retained, the specific deductions for Professional Tax and Entertainment Allowance are removed.
What is the impact of the change to Section 16(iii) (New Regime) under the new tax code?
The transition impact for Section 16(iii) (New Regime) is rated Medium. Slight increase in taxable salary for employees in states levying high Professional Tax.
What should I watch out for when Section 16(iii) (New Regime) moves to the 2025 code?
State professional tax paid can no longer be deducted from federal taxable salary. These points are specific to Section 16(iii) (New Regime) (Professional Tax & Entertainment Allowance Deductions Disallowed).
Disclaimer: This mapping of Section 16(iii) (New Regime) (Professional Tax & Entertainment Allowance Deductions Disallowed) under the Income-tax Act, 2025 is for educational and reference purposes only, based on publicly available drafts and circulars. As Section 16(iii) (New Regime) is currently marked Deleted, always confirm its treatment with a qualified Chartered Accountant before filing or making compliance decisions.
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