InvestorQ : What is standard deduction in a Budget? What changes have been made to standard deduction in the interim Budget?
Anjali Desai made post

What is standard deduction in a Budget? What changes have been made to standard deduction in the interim Budget?

Answer
user profile image
Sadaf Khan answered.
1 year ago


Standard deduction is a fixed amount which can be reduced by salaried taxpayers, from their gross salary. Standard deduction, of Rs 40,000, was reintroduced in Union Budget 2018 after being abolished in Finance Act 2005.

The deduction replaced the transport allowance of Rs 1600 per month and medical allowance of Rs 15,000 per annum. This is the amount that can be deducted from gross salary and claimed as an exemption. This increase in basic exemption limit benefits all income tax payers.

Today, Finance Minister Piyush Goyal increased the standard deduction amount from Rs 40,000 to Rs 50,000.

He said this move, “will provide additional tax benefit of Rs 4,700 crore to more than 3 crore salary earners and pensioners.”