October 30, 2020

Itax Software

Income Tax Software

Good and Bad News to the all Salaried persons the Standard Deduction of Rs.40,000 in 2018, Income Tax Benefits by the Finance Budget 2018-19


Medical and Transportation Allowances Subsumed into Standard Deduction

Standard Deduction: Budget
2018 has not cheered the Salaried Class at all, neither the tax slab is
changed nor the deduction limit under section 80C is hiked. The tax
rebate of Rs.5,000 has been reduced to Rs.2,500 and that too up to the
taxable income of Rs.3,00,000 which was earlier up to Rs.5,00,000.
The
only changed proposed for the salaried class is the reintroduction of
Standard Deduction of Rs.40,000. This standard deduction was the part of
income tax act but was done away with in Union Budget 2005-06 by P.
Chidambaram by introducing medical and transportation allowances, but
now from Assessment Year 2019-20, both medical allowances and
transportation allowance are subsumed into the standard deduction of
Rs.40,000.

Download: Automated Income Tax Arrears Relief Calculator U/s 89(1) with Form 10E from F.Y.2000-01 to F.Y.2018-19


All about Standard Deduction

1.
Standard Deduction allows a flat deduction of a specified amount (i.e.
Rs.40,000) from income of salaried taxpayers towards expenses incurred
during the course of employment. Say for example if your salary is
Rs.5.20 lakh than you can start calculating tax by deducting Rs.40,000
straight away i.e. start with Rs.4.80 lakh.
2.
Standard Deduction is reintroduced by abolishing medical reimbursements
and transport allowance, enhancing a deduction by just Rs.5,800 which
would in turn saves tax of mere Rs.290 for the person falling in lowest
tax bracket of 5%, Rs.1,160 for person falling in tax bracket of 20% and
Rs.1,740 for the person falling in highest tax bracket of 30%. But the
same savings of tax is nullified due to the increase in cess by 3% to
4%.

Income Tax Slab for the Financial Year 2018-19&Ass Year 2019-20 as given below:-

Download Automated Advance Income Tax Calculator for F.Y.2018-19 & A.Y. 2019-20


3.
Unlike Medical Reimbursements and Transport Allowances, No proof or any
type of documents are needed to claim the standard deduction of
Rs.40,000.
4.
Since pension is taxable under the head of salaries, any pension
received by a person from his past employer shall be entitled to claim a
standard deduction of Rs.40,000 or pension amount, whichever is lower
under section 16 of the Income Tax Act.

5.
Please note that No standard deduction of Rs.40,000 is allowed in case
of family pension received by the legal heirs of the deceased. The
Family Pension is taxed under the head of income from other sources and a
standard deduction of Rs.15,000 or 1/3rd of uncommitted pension received, whichever is lower, shall be exempt.

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