New Delhi. Standard Tax Deduction: The employees are expecting an increase in the standard deduction benefits once again from the budget of the year 2018 from the upcoming budget (Budget 2022). At present, the standard deduction limit is Rs 50,000 per annum. The purpose of starting this is to give more money to the employees by giving them tax exemption.
Employees and employee organizations believe that the rules of income tax do not show in favor of salaried employees. Here businessmen and consultants can claim exemption on a variety of expenses in a month, but there are very limited options available for salaried people. To overcome this difference, the government implemented it back in the budget of 2018 (Budget 2022). So let us know what is the standard deduction and who is entitled to it.
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What is Standard Tax Deduction
Standard deduction is the amount that is deducted directly from your own income. Tax is calculated according to the tax slab only on the remaining income. In standard deduction, a certain amount is exempted from the total salary so that the total taxable income is reduced.
Who can take advantage of this
The standard deduction can be availed by the salaried employees and pensioners who have not opted for the new tax rules. There is a provision for a lower tax rate in the new rules. Apart from this, pensioners taking pension are also entitled to get this deduction. But standard deduction is not available on family pension. This means that after the death of an employee, if any of his dependents is drawing family pension, then he is not entitled to this deduction or exemption.
think of it as
The standard deduction limit is Rs 50,000 or the total salary, whichever is less. For example, a taxpayer named ‘A’ has a total annual salary of Rs 5 lakh, in which case he will get a standard deduction of Rs 50,000. If person ‘A’ worked for only one month in a year and got salary of Rs 42000 then in that case he would be entitled to standard deduction of Rs 42000.
no effect of changing job
Change of job has no effect on standard deduction exemption. Nangia Andersen LLP Partner Sunil Gidwani told Live Mint that the total salary here includes all the components of the salary paid by the employer and all the taxable parts of all the allowances and perks. Even if an employee changes his job in a year, he is entitled to get the benefit of standard deduction.
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Budget increase expected
Budget 2022 Employees are anticipating that the standard deduction limit will increase. Alok Agarwal, Partner, Deloitte India, said that apart from other exemptions, salaried employees are also expecting an increase in standard deduction in the budget. Aggarwal says that it is better to add it to the cost inflation index than to increase it from Rs 50,000. Salaried employees will benefit more from this.
Tags: budget, income tax