(1) Notwithstanding the provisions of 1[theRailways Act, 1989 (24 of 1989)], the wages of an employed person shall be paid to him withoutdeductions of any kind except those authorised by or under this Act.
2[Explanation I].--Every payment made by the employed person to the employer or his agent shall, forthe purposes of this Act, be deemed to be a deduction from wages.
3[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 anefficiency 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 forthe imposition of any such penalty are in conformity with the requirements, if any, which may bespecified in this behalf by 4[appropriate Government] by notification in the Official Gazette.]
(2) Deductions from the wages of an employed person shall be made only in accordance with theprovisions 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 forcustody, or for loss of money for which he is required to account, where such damage or loss isdirectly attributable to his neglect or default;
5[(d) deductions for house-accommodation supplied by the employer or by Government or anyhousing board set up under any law for the time being in force (whether the Government or the boardis the employer or not) or any other authority engaged in the business of subsidizinghouse-accommodation which may be specified in this behalf by 4[appropriate Government] bynotification in the Official Gazette;]
(e) deductions for such amenities and services supplied by the employer as the 6 4[appropriateGovernment] 7[or any officer specified by it in this behalf] may, by general or special order,authorise;
Explanation--The word "services" in 8[this clause] does not include the supply of tools and rawmaterials required for the purposes of employment;]
9[(f) deductions for recovery of advances of whatever nature (including advances for travellingallowance or conveyance allowance), and the interest due in respect thereof, or for adjustment ofover-payments of wages;
(ff) deductions for recovery of loans made from any fund constituted for the welfare of labour inaccordance with the rules approved by 10[appropriate Government], and the interest due in respectthereof;
(fff) deductions for recovery of loans granted for house-building or other purposes approved by10[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 suchorder;
(i) deductions for subscriptions to, and for repayment of advances from any provident fund towhich the Provident Funds Act, 1925 (19 of 1925), applies or any recognized provident fund asdefined 11[in clause (38) of section 2 of the Income-tax Act, 1961 (43 of 1961)], or any provident fundapproved in this behalf by 10[appropriate Government], during the continuance of such approval; 12
13[(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 amember on such conditions as may be prescribed,
for contribution to the National Defence Fund or to any Defence Savings Scheme approved by10[appropriate Government];]
(j) deductions for payments to co-operative societies approved by 10[appropriate Government] 14[orany officer specified by it in this behalf] or to a scheme of insurance maintained by the Indian PostOffice; 15[and]
15[16[(k) deductions, made with the written authorisation of the person employed for payment ofany premium on his life insurance policy to the Life Insurance Corporation of India established underthe Life Insurance Corporation Act, 1956 (31 of 1956), or for the purchase of securities of theGovernment of India or of any 10[appropriate Government] or for being deposited in any Post OfficeSavings Bank in furtherance of any savings scheme of any such Government.]]
17[(kk) deductions made, with the written authorisation of the employed person, for the payment ofhis contribution to any fund constituted by the employer or a trade union registered under the TradeUnion Act, 1926 (16 of 1926), for the welfare of the employed persons or the members of theirfamilies, or both, and approved by 10[appropriate Government] or any officer specified by it in thisbehalf, during the continuance of such approval;
(kkk) deductions made, with the written authorisation of the employed person, for payment of thefees payable by him for the membership of any trade union registered under the Trade Unions Act,1926 (16 of 1926);]
18[(l) deductions for payment of insurance premia on Fidelity Guarantee Bonds;
(m) deductions for recovery of losses sustained by a railway administration on account ofacceptance 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 thefailure of the employed person to invoice, to bill, to collect or to account for the appropriate chargesdue to that administration whether in respect of fares, freight, demurrage, wharfage and carnage or inrespect of sale of food in catering establishments or in respect of sale of commodities in grain shopsor otherwise;
(o) deductions for recovery of losses sustained by a railway administration on account of anyrebates or refunds incorrectly granted by the employed person where such loss is directly attributableto his neglect or default;]
19[(p) deductions, made with the written authorisation of the employed person, for contribution tothe Prime Ministers National Relief Fund or to such other Fund as the Central Government may, bynotification in the Official Gazette, specify;]
20[(q) deductions for contributions to any insurance scheme framed by the Central Government forthe benefit of its employees.]
21[(3) Notwithstanding anything contained in this Act, the total amount of deductions which may bemade under sub-section (2) in any wage-period from the wages of any employed person shall notexceed--
(i) in cases where such deductions are wholly or partly made for payments to co-operativesocieties 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 percent. or, as the case may be, fifty per cent. of the wages, the excess may be recovered in such manneras may be prescribed.
(4) Nothing contained in this section shall be construed as precluding the employer from recoveringfrom the wages of the employed person or otherwise any amount payable by such person under any lawfor the time being in force other than 22[the Railways Act, 1989 (24 of 1989)].]
STATE AMENDMENTS
Kerala--
Amendment of section 7.--In section 7 of the Payment of Wages Act, 1936 (Central Act 4 of 1936),in sub-section (2), after clause (o), the following clause shall be inserted, namely.--
"(p) deductions for repayment to the State Government of the amount of financial and granted underthe Kerala Financial And (to the Discharged or Dismissed Labour) Rules, 1958"
[Vide Kerala Act 34 of 1969, sec. 2.] (w.e.f. 8-10-1969).
Karnataka
Amendment of section 7.--In section 7 of the principal Act in sub-section (2), after clause (p), thefollowing clauses shall be added namely:--
"(q) deductions to recover from a person re-employed after the termination of his former employmentany amount paid to him from a provident fund or as a gratuity on such termination:
Provided that such recovery shall not exceed 20 per cent of total earnings. Re-employment in thiscontext means employment under the same employer;
(r) deduction specially authorised by the State Government for purposes beneficial to the employedperson".
[Vide Karnataka Act 2 of 1977, s. 3].