GOOD NEWS! BUDGET 2024 MAY SEE HIKE IN STANDARD DEDUCTION LIMIT FOR SALARIED TAXPAYERS - CHECK DETAILS

The Ministry of Finance is assessing the possibility of raising the standard deduction limit for income taxpayers under the new regime. The standard deduction simplifies the process of determining taxable income for salaried individuals and pensioners. It is a fixed amount subtracted from the gross salary in lieu of the expenses which an employee would typically incur in relation to their employment. This reduces the taxable income and, consequently, the overall tax liability. This deduction negates the need for employees to submit various proofs to claim deductions for transport allowance and medical expenses.

According to a report by Sidhartha in The Times of India, various government departments are in favor of providing tax concessions, particularly to the middle class. For the financial year 2023-24, the standard deduction is set at Rs 50,000 for salaried individuals and pensioners. For family pensioners, it is Rs 15,000 or 1/3rd of the family pension, whichever is lower. This amount is directly subtracted from the gross income, thus reducing the taxable income and easing the tax burden.

Additionally, the rebate under Section 87A was increased for taxable incomes up to Rs 7 lakh, allowing those within this income bracket to avoid paying any tax under the new regime. The highest surcharge was also eliminated under this new regime. Currently, individuals with taxable incomes exceeding Rs 3 lakh must pay a 5 per cent income tax, and there have been industry suggestions to adjust rates in higher brackets to stimulate consumption.

An increased standard deduction would benefit all salaried taxpayers, including those in higher income segments, though it may result in some revenue loss. Most discussions are currently within the finance ministry, with internal assessments ongoing on several issues. These will be discussed with other government departments before the finance ministry makes a final decision, incorporating feedback from the PMO.

2024-06-24T11:59:29Z dg43tfdfdgfd