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In the upcoming Union Budget 2024-25, Finance Minister Nirmala Sitharaman may announce an increase in the threshold limit of the standard deduction for salaried individuals currently pegged at Rs 50,000.
A report shared by Moneycontrol on Thursday said Sitharaman could consider increasing the tax exemption limit to Rs 1 lakh, providing significant relief to taxpayers.
What is the standard deduction in the taxation system?
Under the Indian taxation laws, standard deduction is a provision for salaried employees and taxpayers receiving a pension. The provision allows eligible individuals to claim a deduction of the decided limit from their taxable income without the need to submit any disclosures or investment proofs.
Is standard deduction applicable under the new tax regime?
This provision is applicable to the employees of government and private establishments, opting for either old or new taxation regime while filing their income tax returns.
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The speculation follows as various stakeholders during the recently held pre-budget meetings with the finance ministry, have called for further tax relief for the public to boost consumption.
Insurance industry wants hike in deduction under 80D
One of the other key demands of the stakeholders linked to personal finance includes raising the limit of tax deduction under 80D of the Income Tax Act. This provision deals with the tax exemption given on payment of medical insurance premiums.
The insurance industry has been pushing for an increase in this threshold, currently set at Rs 25,000 to Rs 50,000 for individuals and Rs 75,000 from existing Rs 50,000 for elderly people, Business Standard reported earlier. To be clear, this provision is available to taxpayers opting for the old tax regime.
The income tax slabs in India vary according to the total income earned and based on the type of regime chosen - old or new. Under the new tax regime, income earned up to Rs 3 lakh is tax-free whereas under the old system, an income of up to Rs 2.5 lakh is tax-free.
The key difference between the two regimes is that the old regime offers more deductions and exemptions.
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