Disallowance of excessive employee benefit expenditure limits deductible employer payments and preserves specific statutory exclusions. The amendment adds sub clause (iii) to section 40(c) disallowing expenditure that provides remuneration, benefits or amenities to an Indian employee to the extent such expenditure exceeds a prescribed monthly limit for employment periods after 28 February 1963, while excluding gratuity, transferred recognised provident fund balances, specified compensation and certain payments under section 17 from the computation; the Explanation to section 40 is amended to refer to the new sub clause.