Income Tax in Budget 2024: Will standard deduction limit be hiked from Rs 50,000 to help salaried taxpayers?
Standard deduction is one of the most widely used deductions as salaried taxpayers can claim it without making any investments. There has been a longstanding demand to increase the standard deduction limit. The demand has become louder after standard deduction was made a part of the new income tax regime last year.
It has been almost five years since standard deduction was revised; the previous instance was in 2019. Though 2024 will see only an interim budget, middle-class taxpayers are eagerly hoping Finance Minister Nirmala Sitharaman will roll out some tax sops. Will the Budget 2024 raise standard deduction from Rs 50,000? This is what experts are saying:
Income Tax in Budget 2024: All about standard deduction
Standard deduction is a flat deduction salaried individuals can claim against taxable salary income without requiring any proof of actual expense incurred. It aims to achieve parity between taxpayers who receive income through salary and those who receive income from business. Standard deduction is available under the old income tax regime and the new income tax regime.
The concept of standard deduction was first introduced in India in 1974. Sharing a brief on the history of standard deduction, Adhil Shetty, CEO of BankBazaar.com, says, «This deduction was available to salaried individuals and pensioners to offset some of their expenses related to employment. It was removed in 2004-2005 as part of the tax simplification measures. Then, it was reintroduced again in the Union Budget in 2018 and set at Rs 40,000 for salaried employees and pensioners.» Budget 2018 reinstated the deduction while withdrawing tax benefits for transport allowance and reimbursement of medical expenses. The goal was to reduce the
