Section 19
Section 19: deductions from salaries
Section 19 sets out, in a single table, all the deductions allowed while computing income chargeable under the head "Salaries" - from the standard deduction and professional tax, to gratuity, pension commutation, retrenchment compensation, voluntary retirement payments, and leave encashment.
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The deductions allowed
Section 19(1) sets out a table of qualifying sums and the amount of deduction allowed for each. A summary:
| Nature of sum | Amount of deduction |
|---|---|
| Tax on employment (professional tax) paid under Article 276(2) of the Constitution | Entire amount |
| Standard deduction | ₹75,000 or the salary, whichever is less, where tax is computed under section 202(1); otherwise ₹50,000 or the salary, whichever is less |
| Death-cum-retirement gratuity (as referred to in section 19(2)(g)) | Entire amount |
| Retiring gratuity under Pension Code/Regulations for defence service members | Entire amount |
| Gratuity under the Payment of Gratuity Act, 1972 | Amount received, restricted to the amount calculated under section 4(2) and 4(3) of that Act |
| Any other gratuity received on retirement, incapacitation, or termination | Minimum of: actual gratuity received; an amount notified by the Central Government; and half a month's salary for each completed year of service (as per the formula in the section) |
| Commuted pension under Central Government Civil Pensions (Commutation) Rules or similar schemes for specified categories of Government/public employees | Entire amount |
| Commuted pension received under any other employer's scheme | A commuted value determined by age, health, interest rates and mortality tables - one-third of the normal pension entitlement if gratuity was also received, otherwise one-half |
| Commuted pension from a fund specified in Schedule VII (Table: Sl. No. 3) | Entire amount |
| Retrenchment compensation under the Industrial Disputes Act, 1947 (or similar rules/orders/standing orders/awards) | Minimum of: compensation received; the amount calculated under section 25F(b) of the Industrial Disputes Act, 1947; and an amount (not less than ₹50,000) as notified by the Central Government |
| Retrenchment compensation under a Central Government-approved special protection scheme | Compensation received (entire amount) |
| Amount received on voluntary retirement or termination under a VRS scheme (section 19(2)(h)) | Minimum of: compensation received; and ₹5,00,000 |
| Leave salary cash equivalent on retirement, for a Central/State Government employee | Entire amount |
| Leave salary cash equivalent on retirement, for other employees | Minimum of: cash equivalent of earned leave at credit (capped at 30 days per year of actual service); 10 × average monthly salary for the preceding 10 months; an amount notified by the Central Government; and the actual payment received |
Clarifications and aggregation rules (Section 19(2))
If gratuity is received from more than one employer in the same tax year (or across earlier years), the aggregate deduction across all such gratuities is capped by reference to the Central Government-notified limit, reduced by amounts already exempted/deducted in earlier years.
For the gratuity and leave-encashment entries, "salary" includes dearness allowance only if the terms of employment provide for it, and excludes all other allowances and perquisites.
Similar aggregation caps apply to leave salary cash equivalent received from more than one employer across tax years.
The VRS deduction is subject to conditions - it must be under a Central Government-approved scheme for specified categories of employer (public sector companies, other companies, statutory authorities, local authorities, co-operative societies, certain universities/IITs, Government, and specified institutions/institutes) - and once claimed for a tax year, cannot be claimed again for a different tax year; nor can relief under section 157 be claimed on the same amount.
The death-cum-retirement gratuity deduction applies to gratuity received under the Central Civil Services (Pension) Rules, 2021 (or predecessor rules) or similar schemes applicable to Union/State civil servants, defence-connected civil posts, all-India services members, or local authority employees.
Frequently asked questions
What is the standard deduction under Section 19?
₹75,000 (or the salary, if lower) where tax is computed under section 202(1); otherwise ₹50,000 (or the salary, if lower), in any other case.
Is professional tax fully deductible from salary income?
Yes - the entire amount of tax on employment paid under Article 276(2) of the Constitution is deductible.
What is the maximum deduction for a voluntary retirement (VRS) payment?
The lower of the actual compensation received and ₹5,00,000, and only under a Central Government-approved VRS scheme meeting the section's conditions.
Can I claim leave encashment deduction from more than one employer without limit?
No - Section 19(2) caps the aggregate deduction for leave salary cash equivalent received across employers/tax years by reference to a Central Government-notified overall limit.
Related sections
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Talk to our tax team about this sectionLast updated 9 September 2026