Budget 2024: Standard deduction limit hiked from Rs 50,000 in new tax regime; check new limit for current financial year
Budget 2024: Income tax slabs revised under new tax regime; check details hereFinance minister has announced a hike in the standard deduction amount in new tax regime hiked to Rs 75000 in Budget 2024. Also, standard deduction limit for family pensioners have been hiked to Rs 25,000 from Rs 15,000.A hike in standard deduction would mean more tax savings for salaried individuals and pensioners. The standard deduction has been hiked for the first time after five years. Last time, the standard deduction was hiked to Rs 50,000 in interim budget 2019 (effective from April 1, 2019).
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Currently, standard deduction of Rs 50,000 is available under new as well as old tax regime. The benefit of standard deduction is available for those who have salary or pension income. Hence, only salaried people and pensioners are eligible to claim this deduction.
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More NewsThe income tax laws also allow a family pensioner having family pension to claim standard deduction under old as well as new tax regime. However, family pensioner can claim standard deduction of Rs 15,000 only.It is important to 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. However, family pension taxable under the same head is eligible for standard deduction.
How to claim standard deduction
Standard deduction is a straight deduction available from salary and pension income. There is no need to submit any documents to claim standard deduction. However, as mentioned above, it is necessary to show receipt of salary/pension income.History 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 This deduction was withdrawn from FY 2005-06.The Budget 2018 brought back standard deduction. This deduction was introduced in lieu of medical reimbursement and transport allowance which were removed. When it was re-introduced, standard deduction of Rs 40,000 was allowed to the salaried. However, in the interim budget 2019, the standard deduction amount was raised to Rs 50,000 - a hike of Rs 10,000.
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This story originally appeared on: India Times - Author:Faqs of Insurances
