Income Tax: The standard deduction was last revised in 2019, which was also an interim budget
The Interim Budget 2024, which will be tabled in Parliament on February 1, will be keenly watched as taxpayers expect some relief in income tax. Various media reports expect a hike in standard deduction in the upcoming interim budget.
The standard deduction was last revised in 2019, which was also an interim budget. However, the last Budget 2023 allowed it in the new tax regime also. Currently, a standard deduction of Rs 50,000 is allowed.
Standard deduction is a flat tax relief for salaried individuals. It is the amount that is deducted from the gross annual salary, which reduces tax liability. For instance, if an individual’s annual salary is Rs 6,50,000, then Rs 50,000 will be deducted and the tax will be calculated on the remaining amount (Rs 6,00,000).
According to an Economic Times report, Akhil Chandna, partner at Grant Thornton Bharat, said, “There is a genuine case for increasing the quantum of the standard deduction to keep pace with the inflation over the last five years. The standard deduction increase can help offset the rising cost of living. As prices for essential goods and services increase, individuals may require additional income to maintain their standard of living.”
The report also quoted Mainstay Tax Advisors partner Kuldip Kumar as saying, “There is no tax break for the expenses employees have to incur to work from home, such as using a portion of the house for working, buying quality earphones, setting up other IT/communication infrastructure, etc. Therefore, raising the standard deduction to Rs 75,000 merits consideration.”
In the Budget 2023, Finance Minister Nirmala Sitharaman overhauled the income tax regime and introduced changes in order to provide relief to the “hard-working” middle class, especially the salaried class.
In the Budget 2023, the government increased the tax exemption limit by Rs 50,000 to Rs 3 lakh, and the rebate was increased from Rs 5 lakh to Rs 7 lakh. Apart from this, a standard deduction of Rs 50,000, which was available for the old regime, was also extended to those opting for the new regime. It means that if your income is up to Rs 7 lakh, you don’t need to pay any tax.
Source: https://www.news18.com/business/income-tax-will-interim-budget-2024-hike-standard-deduction-limit-for-salaried-individuals-8740954.html
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