Income tax relief: Budget 2024 may increase standard deduction limit to ₹1 lakh

By: Admin
July 03, 2024
Categories: Income Tax News|News
4 Min Read

The Finance Ministry is contemplating an increase in the standard deduction limit under the new tax regime, according to CNBC Awaaz report.

The decision is expected to be part of Finance Minister Nirmala Sitharaman’s first budget of her third term, following consultations and internal assessments within various government departments and the Prime Minister’s Office.

Understanding standard deduction

Standard deduction is a fixed amount that taxpayers can deduct from their taxable income without the need for receipts or expense proofs.

It reduces the taxable income, thereby lowering the overall tax liability.

Current proposal and previous budget measures

In the last financial year’s budget, Finance Minister Nirmala Sitharaman proposed a standard deduction of ₹50,000 for salaried individuals and pensioners under the new tax regime.

This deduction applies by default unless taxpayers choose to opt-out.

Additionally, the income threshold eligible for tax relief under Section 87A was raised to ₹7 lakh.

The new regime also eliminated the highest surcharge, simplifying tax calculations.

However, experts argue that this limit may no longer suffice given current economic conditions.

There is speculation that the government might consider raising it to at least ₹1 lakh to better align with present-day expenses and inflation rates.

How standard deduction limit has changed over the years?

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