Budget 2024: Standard deduction is the most used deduction which does not require any investment to save money. The salaried class has been demanding for a long time to increase the limit of standard deduction.
This demand has increased even more when last year the government added the standard deduction with the new tax regime. It has been almost five years since the standard deduction was revised. The standard deduction was last changed in the year 2019.
Although the budget of year 2024 will be only an interim budget, still the middle class salary class is sitting with high expectations. It is expected that Finance Minister Nirmala Sitharaman may give some relaxation on some taxes. Will the standard deduction be increased by Rs 50,000 in Budget 2024?
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. At present, standard deduction is available in both the old tax regime and the new tax regime.
Standard deduction was introduced for the first time in the year 1974
Standard deduction was first introduced in India in 1974. As per the history of Standard Deduction, this deduction was available to salaried individuals and pensioners to cover some of their expenses. It was removed in 2004–2005 to simplify taxation. It was 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.
Why should the standard deduction be increased by Rs 50,000 in Budget 2024?
There are several reasons for increasing the standard deduction limit from Rs 50,000. Many tax experts believe that it needs to be increased from Rs 50,000 to Rs 1,00,000. People need to increase the standard deduction to cope with inflation and increase disposable income.
