Budget 2024: Standard deduction is the most commonly used tax deduction. Salary class taxpayers know about this because money is directly saved in it. You don’t have to invest to save money.
The salaried class is expecting the Standard Deduction to increase over a period of time. It has been almost five years since the standard deduction was revised. The standard deduction was last changed in the year 2019. The budget of 2024 will be only an interim budget and the Finance Minister has already said that there will be no major announcements in the budget. There are reports that the government may increase the standard deduction to Rs 90,000 in the budget.
Will the standard deduction increase to Rs 90,000?
Currently the standard deduction limit is Rs 50,000. Many tax experts believe that this will now increase to Rs 90,000. That is, the government can increase this limit from Rs 50,000 to Rs 90,000 in the interim budget. If this happens, it can prove to be a big saving for taxpayers.
What is standard deduction?
Standard deduction is a flat deduction the salaried class can avail of from taxable income without showing any expenditure or saving. Its objective is to achieve parity between taxpayers who receive income through salaries and income from business. Last year, the government also added standard deduction to the new tax regime. At present, standard deduction is available in both the old tax regime and the new tax regime.
This is the history of standard deduction
Standard deduction was first introduced in India in 1974. According to the history of standard deduction, this deduction is given to salaried class and pensioners to cover their expenses. It was removed in 2004–2005 to simplify taxation. It was then re-introduced in the Union Budget in 2018 and fixed at Rs 40,000 for salary class employees and pensioners.
In the interim budget presented on 1 February 2019, the standard deduction limit was increased to Rs 50,000. However, this was limited to the old tax system. In Budget 2023, it was combined with the new tax regime. Standard deduction of Rs 50,000 was allowed in the new tax regime. Now this is available on both new and old tax regime.
