Standard deduction limit hiked to Rs 50,000

Finance Minister Piyush Goyal, in the interim budget 2019 proposes to hike the standard deduction limit to Rs 50,000 from Rs 40,000, currently.This move will bring more tax savings for the salaried class. Prior to the Budget, there were rumours that the Narendra Modi government was looking at options to give income tax benefits to the middle class.The benefit of standard deduction from salary was introduced in Budget 2018. The deduction of Rs 40,000 was introduced in lieu of medical reimbursement and transport allowance. The latter two were common tax-exempt components of a person's salary structure till FY 2017-18. Till FY 2017-18, medical reimbursement received by an individual from the employer was exempt from tax for maximum up to Rs 15,000. Similarly, transport allowance received as part of salary was exempt up to Rs 1,600 per month or Rs 19,200 annually. As per the current laws, the benefit of standard deduction can be claimed not only by the salaried class but also by pensioners who receive pension directly from their previous employers.Previously, standard deduction was a part of the Income-tax Act until former Finance Minister, P. Chidambaram, withdrew it in the Union budget of 2005-06.Earlier, the amount of deduction that was allowed until 2004-05 was equivalent to Rs 30,000 or 40 percent of the income, whichever was lower, for salaried employees earning an annual income between Rs 75,000 and Rs 5 lakh. There was also a limit set for standard deduction at Rs 20,000 for those earning more than Rs 5 lakh.

from Economic Times http://bit.ly/2Uw3ivC