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:
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.