Standard Deduction for Salaried Individual under Section-16(ia) from A.Y. 2019-2020

From Budget 2018, introduced a Standard deduction of Rs. 40000/- for salaried employee from A.Y. 2019-2020
This will be in lieu of existing transport allowances and Medical expenses reimbursement.

Let us understand this with a small example:

Particulars	Until AY 2018-19	From AY 2019-20
Gross Salary (in Rs.)	5,00, 000	5,00,000
(-) Transport Allowance	19,200	Not Applicable
(-) Medical Allowance	15,000	Not Applicable
(-) Standard Deduction	Not Applicable	40,000
Net Salary	4,65,800	4,60,000

For Taxpayers Receiving Pension:

In a recent clarification issued by the income tax department, if a taxpayer has received pension from the former employer, it is taxable under the head ‘Salaries’. Therefore, the taxpayer shall be entitled to claim a standard deduction of Rs. 40,000 or the amount of pension whichever is less.