Standard deduction is a fixed deduction that is allowed to specific income tax assessees, irrespective of expenses incurred or investments made. Unlike other deductions and exemptions, to claim standard deduction, one need not provide any documents and proofs.
Standard deduction has been reintroduced by amending the Finance Act 2018. The deduction is available under Section 16 of the Income Tax Act, 1961. A salaried individual or pensioner can claim standard deduction up to Rs 40,000 from her income.
Standard deduction was introduced in this year’s budget in lieu of the earlier exemption in respect of transport allowance and reimbursement of miscellaneous medical expenses, which an individual could claim up to Rs 1,600 per month and Rs 1,250 per month, respectively. Together these two amounted to Rs 34,200 per year. Standard deduction has gone up by Rs 5,800 (Rs 40,000-Rs 34,200), helping a person in the highest tax slabs save Rs 1,810.
Also, taxpayers will not need to submit documents or bills to claim standard deduction, like they had to while claiming tax deduction for transport and medical allowances.
Standard deduction has been made available from FY19 and will, accordingly, apply from assessment year 2019-2020.
Source by livemintShare: