Standard deduction from salary and pension income. What is the standard deduction in income tax law?
This
standard deduction U/s 16(ia) is a flat deduction of Rs. 50,000 / - is taxable
under your "principal salary". This tax benefit can be claimed
regardless of the actual amount spent
Transportation
allowance and
•
Medical allowance
*
From the financial year 2020-21 (AY2021-22), if a person chooses the old tax
system, then the deduction can be demanded from him. Compare your tax
liabilities under the old and new tax systems.
What is its purpose?
The purpose is to introduce standard deduction
Paper
allowed to reduce and cut paper regardless of the actual cost.
Exemption
of middle-class salaried persons
Pension
to provide benefits to pensioners
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What
is the effect of standard deduction on tax for salaried persons?
The introduction of standard deductions further helped middle-class employees
reduce their tax liability. The overall additional cutting facility was Rs.
5,800 (15,800 / - for FY 2019-20). The full account of the tax effect due to the standard deduction is given below
What
is the effect of standard deduction on pensioners?
This decision to allow standard deductions provides significant benefits to
pensioners, who generally do not receive any allowances due to transportation
and medical expenses. In addition, the standard deduction benefit will only be
allowed for pensioners if it is taxable as salary income. If it is taxed as income
from other sources then the benefit of the standard deduction will not be
available.
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What
is it the standard cutting limit?
The
amount of standard deduction cannot exceed the amount of salary. The maximum
discount will be Rs. 50,000 / - or less.
How
is the standard deduction calculated for multiple employers?
No standard deduction is available on this basis. Employers. The standard
deduction is not based on this but on the overall limit for the whole year.
Employers.
Suppose
Mr. A has worked for 2 employers in the fiscal year 2019-1Y. In that case, you
may have doubts as to how much standard deduction Mr. A can claim.
Option
1 Rs 50,000
Option
2 Rs. 1,00,000 (Rs. 50,000 for each employer)
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Mr.
A can avail of standard deduction up to a maximum of Rs. 5,000. 50,000 / -
What
is the treatment of standard deduction under the new tax system?
Budget
2020 has introduced a new tax system (FY 2020-21) under which income will be
taxable at a lower rate. To make this option the taxpayer has to avoid large
tax exemptions and benefits including standard deduction.
Frequently
Asked Questions
Q.
Is there a standard deduction for senior citizens?
Yes
Question:
Can I claim the standard deduction even if my income is more than Rs. 500,000?
Standard
deductions are available regardless of your income tax slab. You will be given
benefits if you have salary income. In this case, the amount of salary is
irrelevant.
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Q.
What proof do I have to submit to claim a standard deduction under income tax?
The standard deduction is a flat deduction for which no proof has to be given by
the employee to the employer / IT department.
Q:
How is a standard deduction different from an income tax deduction?
Income
tax deduction usually means 80C, 80D, etc.
Standard
Deduction Chapter VI-A Deduction such as Section 80C, 80D, etc.
This
is a flat cut regardless of the actual cost. These expenses are based on actual
expenses/investments.
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This deduction is only available to those who earn from salary.
This deduction is allowed from the salary before the total income comes. These
deductions are allowed after calculating the total income.
The
standard deduction limit is Rs. 50,000 / - (Rs. 40,000 for FY 2018-19) No
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Q.
Can an employee claim both the standard deduction and income tax exemption?
Yes,
an employee can claim both standard deduction and income tax deduction.
Q.
Is the standard deduction calculated monthly?
The standard deduction is not calculated monthly. A flat cut is allowed for the
whole year.
Q.
Is there a standard deduction for self-employment in
Self-employed
people do not get salary income. They are making business income. Therefore,
self-employed persons cannot claim the standard deduction because the standard
deduction is available only from salary.
Q.
Does standard deduction apply to Central or State Government employees?
Yes,
the standard deduction is available for central or state government employees,
Question:
Does the standard deduction of Rs 50,000 under section 1 apply to a person
whose only source of income is interest from FD?
No,
the standard deduction is available only from salary and pension income and not
on income from other sources.
Q-
My payslip says that my u / s (10) and (17) are deducted, amounting to INR
87168. What does this mean?
This
means that you are eligible to claim the same discount from your salary income in
case of different allowances and grants etc.
Q.
How can I claim that the employer did not calculate in Form-16?
If
you can claim a deduction at the time of filing the return if not accounted for
by the employer, you are eligible to claim a deduction.
Feature of this Excel Utility:-
1) This
Excel utility prepares and calculates your income tax as per the New Section
115 BAC (New and Old Tax Regime)
2) This
Excel Utility has an option where you can choose your option as New or Old Tax
Regime
3) This
Excel Utility has a unique Salary Structure for Government and Non-Government
Employee’s Salary Structure.
4) Automated
Income Tax Arrears Relief Calculator U/s 89(1) with Form 10E from the
F.Y.2000-01 to F.Y.2021-22 (Update Version)
5) Automated
Income Tax Revised Form 16 Part A&B for the F.Y.2021-22
6) Automated
Income Tax Revised Form 16 Part B for the F.Y.2021-22
