Rule 17 of the Income-tax Rules, 2026

Where this rule sits

Rule 17 gives effect to Section 17 of the Income-tax Act, 2025. A rule cannot go beyond the section it serves: where the two seem to differ, the section governs.

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What this rule does

The rule fixes a single figure. For the purposes of section 17(1)(c)(ii), the prescribed income under the head "Salaries" is Rs. 400000.

Why it is there

Section 17(1)(c)(ii) is drafted by reference to an amount of income under the head "Salaries" that is left to be prescribed. The rule supplies that amount and nothing else. The section decides what follows from being above or below the figure; the rule decides only where the figure sits.

Who it applies to

• An employee whose income under the head "Salaries" is measured against the prescribed figure for section 17(1)(c)(ii)
• An employer applying section 17(1)(c)(ii) when valuing salary for that employee

The figures, and what each one turns on

What this means in practice

The figure is a prescribed threshold, not a deduction, an exemption or a rate. It is also confined by its own words to section 17(1)(c)(ii), so it cannot be carried across to any other limb of section 17 or to any other head of income. Because the rule states the amount outright, there is no notification to look for and no formula to apply — the only question in a given case is how income under the head "Salaries" is computed for that employee, which the section and not this rule governs.

An example

An employee's income under the head "Salaries" for the tax year works out to Rs. 3,90,000; another employee in the same office is at Rs. 4,10,000. Only the second is above the prescribed figure of Rs. 400000 for the purposes of section 17(1)(c)(ii). Nothing in this rule says what turns on that; it says only where the line is drawn.

Where you meet this rule

A reader meets it inside the salary computation an employer makes when deducting tax, and in the salary schedule of the return where section 17(1)(c)(ii) is applied. There is no separate form or filing under this rule.

The words themselves

What people get wrong

• Treating Rs. 400000 as an exemption or a deduction. Rule 17 prescribes a figure of salary income for section 17(1)(c)(ii); it does not exclude anything from tax.
• Applying the figure to other parts of section 17. The rule is expressly "for the purposes of section 17(1)(c)(ii)".
• Looking for a notification. The amount is stated in the rule itself, so no separate notified figure exists to be found.
• Assuming the figure has been indexed or scaled. The rule states one amount and provides no mechanism for varying it.