Section 7 — Deductions which may be made from wages.

7. Deductions which may be made from wages.—(1) Notwithstanding the provisions of 
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[the 

Railways Act, 1989 (24 of 1989)], the wages of an employed person shall be paid to him without 

deductions of any kind except those authorised by or under this Act. 

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[Explanation I].-Every payment made by the employed person to the employer or his agent shall, for 

the purposes of this Act, be deemed to be a deduction from wages. 

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[Explanation II.-Any loss of wages resulting from the imposition, for good and sufficient cause, 

upon a person employed of any of the following penalties, namely:— 

(i) the withholding of increment or promotion (including the stoppage of increment at an 

efficiency bar): 

(ii) the reduction to a lower post or time scale or to a lower stage in a time scale: or 

(iii) suspension, 

shall not be deemed to be a deduction from wages in any case where the rules framed by the employer for 

the imposition of any such penalty are in conformity with the requirements, if any, which may be 

specified in this behalf by 
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[appropriate Government] by notification in the Official Gazette.] 

(2) Deductions from the wages of an employed person shall be made only in accordance with the 

provisions of this Act, and may be of the following kinds only, namely:— 

(a) fines; 

(b) deductions for absence from duty; 

(c) deductions for damage to or loss of goods expressly entrusted to the employed person for 

custody, or for loss of money for which he is required to account, where such damage or loss is 

directly attributable to his neglect or default; 

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[(d) deductions for house-accommodation supplied by the employer or by Government or any 

housing board set up under any law for the time being in force (whether the Government or the board 

is the employer or not) or any other authority engaged in the business of subsidizing                   

house-accommodation which may be specified in this behalf by 
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[appropriate Government] by 

notification in the Official Gazette;] 

(e) deductions for such amenities and services supplied by the employer as the 
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*** 

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[appropriate 

Government] 
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[or any officer specified by it in this behalf] may, by general or special order, 

authorise; 

Explanation—The word “services” in 
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[this clause] does not include the supply of tools and raw 

materials required for the purposes of employment;] 

                                                           
1. Subs. by Act 1 of 2017, s. 2, for section 6 (w.e.f. 28-12-2016). 

2. Subs. by Act 41 of 2005, s. 6, for “sub-section (2) of section 47 of the Indian Railways Act, 1890 (9 of 1890)” (w.e.f. 9-11-2005). 

3. Explanation renumbered as Explanation I thereof by Act 68 of 1957, s. 5 (w.e.f. 1-4-1958). 

4. Ins. by s. 5, ibid. (w.e.f. 1-4-1958). 

5. Subs. by Act 41 of 2005, s. 3, for “the State Government” (w.e.f. 9-11-2005). 

6. Subs. by Act 68 of 1957, s. 5, for clause (d) (w.e.f. 1-4-1958). 

7. The words “Governor-General in Council or” omitted by the A.O. 1937. 

8. Ins. by Act 53 of 1964, s. 6 (w.e.f. 1-2-1965). 

9. Subs. by Act 56 of 1974, s. 3 and the Second Schedule, for “this sub-clause” (w.e.f. 20-12-1974). 



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[(f) deductions for recovery of advances of whatever nature (including advances for travelling 

allowance or conveyance allowance), and the interest due in respect thereof, or for adjustment of 

over-payments of wages; 

(ff) deductions for recovery of loans made from any fund constituted for the welfare of labour in 

accordance with the rules approved by 
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[appropriate Government], and the interest due in respect 

thereof; 

(fff) deductions for recovery of loans granted for house-building or other purposes approved by 
2
[appropriate Government] and the interest due in respect thereof;] 

(g) deductions of income-tax payable by the employed person; 

(h) deductions required to be made by order of a Court or other authority competent to make such 

order; 

(i) deductions for subscriptions to, and for repayment of advances from any provident fund to 

which the Provident Funds Act, 1925 (19 of 1925), applies or any recognized provident fund as 

defined 
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[in clause (38) of section 2 of the Income-tax Act, 1961 (43 of 1961)], or any provident fund 

approved in this behalf by 
2
[appropriate Government], during the continuance of such approval; 

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*** 

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[(ii) deductions made with the written authorisation of— 

(i) the employed person; or 

(ii) the president or secretary of the registered trade union of which the employed person is a 

member on such conditions as may be prescribed, 

for contribution to the National Defence Fund or to any Defence Savings Scheme approved by 
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[appropriate Government];] 

(j) deductions for payments to co-operative societies approved by 
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[appropriate Government] 

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[or 

any officer specified by it in this behalf] or to a scheme of insurance maintained by the Indian Post 

Office; 
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[and] 

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[

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[(k) deductions, made with the written authorisation of the person employed for payment of 

any premium on his life insurance policy to the Life Insurance Corporation of India established under 

the Life Insurance Corporation Act, 1956 (31 of 1956), or for the purchase of securities of the 

Government of India or of any 
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[appropriate Government] or for being deposited in any Post Office 

Savings Bank in furtherance of any savings scheme of any such Government.]] 

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[(kk) deductions made, with the written authorisation of the employed person, for the payment of 

his contribution to any fund constituted by the employer or a trade union registered under the Trade 

Union Act, 1926 (16 of 1926), for the welfare of the employed persons or the members of their 

families, or both, and approved by 
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[appropriate Government] or any officer specified by it in this 

behalf, during the continuance of such approval; 

(kkk) deductions made, with the written authorisation of the employed person, for payment of the 

fees payable by him for the membership of any trade union registered under the Trade Unions Act, 

1926 (16 of 1926);] 

                                                           
1. Subs. by Act 53 of 1964, s. 6, for clause (f) (w.e.f. 1-2-1965). 

2. Subs. by Act 41 of 2005, s. 3, for “the State Government” (w.e.f. 9-11-2005). 

3. Subs. by s. 6, ibid., for “in section 58A of the Indian Income-tax Act, 1922” (w.e.f. 9-11-2005). 

4. The word “and” omitted by Ordinance 3 of 1940, s. 2. 

5. Ins. by Act 42 of 1971, s. 6 (w.e.f. 4-12-1971). 

6. Ins. by Act 53 of 1964, s. 6 (w.e.f. 1-2-1965). 

7. Added by Ordinance 3 of 1940, s. 2 

8. Subs. by Act 68 of 1957, s. 5, for clause (k) (w.e.f. 1-4-1958). 

9. Ins. by Act 38 of 1982, s. 7 (w.e.f. 15-10-1982). 



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[(l) deductions for payment of insurance premia on Fidelity Guarantee Bonds; 

(m) deductions for recovery of losses sustained by a railway administration on account of 

acceptance by the employed person of counterfeit or base coins or mutilated or forged currency notes; 

(n) deductions for recovery of losses sustained by a railway administration on account of the 

failure of the employed person to invoice, to bill, to collect or to account for the appropriate charges 

due to that administration whether in respect of fares, freight, demurrage, wharfage and carnage or in 

respect of sale of food in catering establishments or in respect of sale of commodities in grain shops 

or otherwise; 

(o) deductions for recovery of losses sustained by a railway administration on account of any 

rebates or refunds incorrectly granted by the employed person where such loss is directly attributable 

to his neglect or default;] 
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[(p) deductions, made with the written authorisation of the employed person, for contribution to 

the Prime Minister‟s National Relief Fund or to such other Fund as the Central Government may, by 

notification in the Official Gazette, specify;] 
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[(q) deductions for contributions to any insurance scheme framed by the Central Government for 

the benefit of its employees.] 
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[(3) Notwithstanding anything contained in this Act, the total amount of deductions which may be 

made under sub-section (2) in any wage-period from the wages of any employed person shall not 

exceed— 

(i) in cases where such deductions are wholly or partly made for payments to co-operative 

societies under clause (j) of sub-section (2), seventy-five per cent. of such wages, and 

(ii) in any other case, fifty per cent. of such wages: 

Provided that where the total deductions authorised under sub-section (2) exceed seventy-five per 

cent. or, as the case may be, fifty per cent. of the wages, the excess may be recovered in such manner 

as may be prescribed. 

(4) Nothing contained in this section shall be construed as precluding the employer from recovering 

from the wages of the employed person or otherwise any amount payable by such person under any law 

for the time being in force other than 
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[the Railways Act, 1989 (24 of 1989)].]