What is Standard Deduction for Salaried Individuals?
Standard Deduction for Salaried Individuals

What is Standard Deduction for Salaried Individuals?

What is Standard Deduction for Salaried Individuals?

The Finance Minister Arun Jaitley introduced Standard Deduction of Rs. 40,000 in Budget 2018, giving the salaried class something to rejoice about. It replaced the transport allowance Rs. 19200 and medical reimbursement of Rs. 15,000 per annum interestingly, the provision of Standard Deduction was earlier available. However, it was abolished in the Finance Act 2005. They are usually deducted from the gross salary and claimed as an exemption.

1. वित्त मंत्री अरुण जेटली ने बजट 2018 में वेतनभोगी वर्ग को कुछ खुशी देने के लिए 40000/- रुपये की मानक कटौती शुरू की।

2. इसके लिए परिवहन भत्ते 19200/- रु और चिकित्सा प्रतिपूर्ति रु 15000/- प्रति वर्ष समाप्त कर दिया गया था।

3. ये भत्ते आम तौर पर सकल वेतन से काट लिए जाते हैं और छूट के रूप में दावा किया जाता है।

The government has proposed requisite amendments to Section 17(2)(viii) of the Income-tax Act, 1961. As a result, the effective additional benefit on account of the standard deduction would be an additional income exemption of Rs 5800.

Standard Deduction – Interim Budget 2019

The Interim Budget presented on 1 February 2019 included numerous tax benefits for the salaried and the middle class. Among them, an additional amount of Rs. 10,000 to the Standard Deduction is a noteworthy move. With the Standard Deduction being Rs 50,000 now, it will help taxpayers immensely to reduce their tax outgo.

 1 फरवरी 2019 को प्रस्तुत अंतरिम बजट में वेतनभोगियों और मध्यम वर्ग के लिए कई कर लाभ शामिल थे। उनमें से 10,000 रुपये की एक अतिरिक्त राशि से स्टैंडर्ड डिडक्शन एक उल्लेखनीय कदम है। अब स्टैंडर्ड डिडक्शन 50,000 रुपये होने से करदाताओं को अपना टैक्स कम करने में काफी मदद मिलेगी।

Let us understand this with a small example:

Particulars Until AY 2018-19 From AY 2019-20 From AY 2020-21
Gross Salary (in Rs.) 8,00,000 8,00,000 8,00,000
(-) Transport Allowance 19,200 Not Applicable Not Applicable
(-) Medical Allowance 15,000 Not Applicable Not Applicable
(-) Standard Deduction Not Applicable 40,000 50,000
Net Salary 7,65,800 7,60,000 7,50,000

From the above, it is evident that the taxable salary has come down on account of the standard deduction.

If Taxpayers Receiving Pension?

A clarification was recently issued by the Income Tax Department according to which, if a taxpayer has received a pension from the former employer, it is taxable under the head ‘Salaries’. Therefore, the taxpayer can claim a standard deduction of Rs. 40,000* or the amount of pension, whichever is less. 

आयकर विभाग द्वारा हाल ही में स्पष्टीकरण जारी किया गया जिसके अनुसार, यदि किसी करदाता को पूर्व नियोक्ता से पेंशन प्राप्त हुई है, तो यह मुख्य “वेतन” के तहत कर योग्य है। इसलिए, करदाता मानक कटौती का दावा कर सकता है। 40,000 रुपये या पेंशन की राशि, जो भी कम हो।

(*Increased to Rs 50,000 for FY 2019-2020(AY 2020-21) through the Interim Budget 2019.)

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