Standard deduction limit increased? Here's what Budget 2024 says Since then maximum deduction amount has been kept unchanged. Last year, finance minister Nirmala Sitharaman brought the benefit of standard deduction under new tax regime
The finance minister in her Interim Budget 2024 speech has not announced any change in the standard deduction limit which is allowed as a tax break to salaried individuals and pensioners. Currently, a standard deduction of Rs 50,000 is allowed from salary and pension income to arrive at taxable income thereby reducing the total tax payable.Hopes of this deduction being increased have not been realised. Hence, an individual will continue to be eligible for the same benefit of Rs 50,000 standard deduction from salary or pension income in the upcoming financial year, 2024-25. Similarly, family pensioners will continue to avail the benefit of Rs 15,000 standard deduction from pension income in FY 2024-25.
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It is important to note that in Budget 2023, Finance Minister Nirmala Sitharaman extended the benefit of standard deduction on salary and pension income to the new tax regime. Till March 31, 2023 (FY 2022-23), this benefit was only available under the old tax regime. From April 1, 2023 (FY 2023-24), the standard deduction tax break was made available for both the tax regimes - old and new.Do note that the annuity payments (pension) received from insurance companies are taxable under the head "Income from other sources". Hence, they are not eligible for standard deduction.
Introduction of standard deduction
Standard deduction was available to taxpayers till FY 2004-05 and was part of the Income-tax Act, 1961. At that time, a salaried individual could claim standard deduction of Rs 30,000 or 40% of the salary, whichever was lower. This was available for salaried individuals having annual income up to Rs 5 lakh. For those earning above Rs 5 lakh, standard deduction of Rs 20,000 was available. This deduction was withdrawn from FY 2005-06.The Budget 2018 brought back the tax break of standard deduction. This deduction was introduced in lieu of medical reimbursement and transport allowance which were removed. When it was reintroduced in April 2018, standard deduction of Rs 40,000 was allowed to the salaried and pensioners. However, in interim budget 2019, the standard deduction amount was raised to Rs 50,000 - a hike of Rs 10,000.
This story originally appeared on: India Times - Author:Faqs of Insurances
