The Statutory Brief

IT Act 1961 → 2025 / Section 16

Salary

Section 16 → Section 19

Deductions from salary: standard deduction, professional tax (and gratuity exemption)

Section 16 of the old Income-tax Act, 1961 · new section 19 under the Income-tax Act, 2025

New reference Section 19

Income-tax Act, 1961Section 16

  • 16(ia): standard deduction ₹75,000 (new regime) / ₹50,000 (old regime)
  • 16(iii): professional tax paid
  • Entertainment allowance deduction for Government employees
  • Gratuity exemption sat separately in section 10(10)

Applies to FY 2025-26 (AY 2026-27) and earlier years.

Income-tax Act, 2025Section 19

  • Section 19 sets out salary deductions in a table
  • Standard deduction ₹75,000 under the new regime (section 202(1)), ₹50,000 otherwise
  • Professional tax (tax on employment) fully deductible — not under the new regime (section 202(2)(a)(iv))
  • Gratuity exemptions (old 10(10)) now sit in the same table, Sl. Nos. 3–6

Applies from tax year 2026-27 (from 1 April 2026).

What changed

Renumbered and restructured: gratuity and other salary exemptions moved from section 10 into the section 19 table. Standard deduction and professional tax unchanged. The entertainment allowance deduction for Government employees (old 16(ii)) has no counterpart in section 19.

Practice notes

  • Gratuity under the Payment of Gratuity Act is exempt to the extent computed under section 4(2) and (3) of that Act (Sl. No. 5).
  • For other employees, the least of actual gratuity, the notified limit and half a month's salary per completed year applies (Sl. No. 6).

These are summaries, not the statutory text. Read the bare Act for both sections on the Income Tax Department's official site, which also has a side-by-side comparison utility.

Frequently asked

What is the standard deduction under the new Income Tax Act 2025?

₹75,000 (or salary, if lower) under the new regime and ₹50,000 under the old regime — section 19, Table Sl. No. 2.

Where is gratuity exemption in the new Income Tax Act 2025?

Section 19, Table Sl. Nos. 3 to 6 (old section 10(10)).

What is section 16 called in the new Income-tax Act, 2025?

Section 16 of the Income-tax Act, 1961 corresponds to Section 19 of the Income-tax Act, 2025, which applies from 1 April 2026 (tax year 2026-27).

What changed in section 16 under the new Income Tax Act?

Renumbered and restructured: gratuity and other salary exemptions moved from section 10 into the section 19 table. Standard deduction and professional tax unchanged. The entertainment allowance deduction for Government employees (old 16(ii)) has no counterpart in section 19.

Is section 16 still applicable for FY 2025-26?

Yes. Income of FY 2025-26 (AY 2026-27) and earlier years is governed by section 16 of the 1961 Act. Section 19 of the 2025 Act applies from tax year 2026-27.

Related sections

192→392TDS on salary (and on withdrawal of accumulated PF balance)115BAC→202New tax regime (default) for individuals, HUFs, AOPs, BOIs and artificial juridical persons10(13A)→Sch IIIHouse rent allowance (HRA) exemption