Section 7 of PW Act : Section 7: Deductions Which May Be Made From Wages

Explanation using Example

Imagine a scenario where John is an employee at a manufacturing company. His employer provides him with housing accommodation and John has taken an advance salary for some personal expenses. At the end of the month, John's wage slip shows the following deductions:

• A deduction for the house accommodation provided by the employer.
• A deduction for the advance salary he had taken.
• A deduction for income tax as per the government's rules.

All these deductions are in compliance with Section 7 of The Payment of Wages Act, 1936. The deductions are legal because they fall under the kinds of deductions permitted by the Act, such as for housing (clause d), recovery of advances (clause f), and income tax (clause i). John's employer has ensured that the total deductions do not exceed 50% of John's wages, adhering to the Act's requirement specified in sub-section (3).