Section 16 Setup – A summary of the activity

Through this activity, you can specify the deductions applicable to an assessee under section 16. These deductions are popularly called “Standard Deductions”. They reduce taxes by a fixed percentage or amount from the assessee’s income. The value deducted from the assessee’s income is dependent on the gender and income earned.

Note that assessee refers to a person who is liable to pay tax under the Income Tax Act. In our context, assessee refers to an employee. And Income refers to salary income of the employee.

Setting of Section 16 involves specifying:

• A tax year for which the details are to be defined.

• The gender for which the details are applicable.

• The Standard deduction table based on which the exempted value is computed. (This table is  issued by the Income Tax Authorities)

Getting familiar with the pages inside

Prerequisites

The tax year must have been defined in the “Create Tax Year” activity.

What you can do in this activity

Specify Section 16 details

Section 16 details

You can specify the statutory deductions applicable to the employees in the “Section 16 Setup” page. It involves

• Selecting a tax year in which the details are specified..

• Specifying the gender to whom the details are applicable.

• Specify the various income levels and the applicable percentage of income or/and maximum amount .

• Save the details entered.