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What is standard deduction of 40000 for salaried employees?
In a recent clarification issued by the income tax department, if a taxpayer has received a pension from the former employer, it is taxable under the head ‘Salaries’. Therefore, the taxpayer can claim a standard deduction of Rs. 40,000* or the amount of pension, whichever is less.
Is standard deduction applicable for salaried employees?
No, Standard deduction is only available from salary & pension income and not on Income from other sources.
Does the standard deduction reduce your income?
The standard deduction reduces the amount of income you have to pay taxes on. Taking the standard deduction means you can’t deduct home mortgage interest or take the many other popular tax deductions — medical expenses or charitable donations, for example.
How can a salaried person reduce income tax?
Save Income Tax on Salary
- Deductions under Section 80C, Section 80CCC and Section 80CCD. Citizens of India can save tax under these 3 sections.
- Medical Expenses.
- Home Loan.
- Education Loan.
- Shares and Mutual Funds.
- Long Term Capital Gains.
- Sale of Equity Shares.
- Donations.
How is standard deduction calculated?
Generally, if your standard deduction is greater than the sum of the itemized deductions for which you qualify, then you just take the standard deduction instead. The size of your standard deduction depends on a few factors: your age, your income and your filing status.
What standard deduction includes?
FAQs on Standard Deduction
Salary | Standard Deduction |
---|---|
For salaried employees who were earning an annual income from Rs. 75,000 to Rs. 5 lakhs | An amount equal to Rs. 30,000 or 40\% of the income, whichever was lower. |
For salaried employees who were earning more than Rs. 5 lakhs. | An amount of Rs. 20,000. |
What are the deduction in salary?
How to calculate TDS on Salary?
Income Tax Slab | TDS Deductions | Tax Payable |
---|---|---|
Up to Rs.2.5 lakhs | NIL | NIL |
Rs.2.5 lakhs to Rs.5 lakhs | 5\% of (Rs.5,00,000-Rs.2,50,000) | Rs.12,500 |
Rs.5 lakhs to Rs. 6.33 lakhs | 20\% of (Rs.6,33,000-Rs.5,00,000) | Rs.26,600 |
What are the ways to save tax in India?
Here’s a list of popular investment options to save tax under section 80C.
- Public Provident Fund.
- National Pension Scheme.
- Premium Paid for Life Insurance policy.
- National Savings Certificate.
- Equity Linked Savings Scheme.
- Home loan’s principal amount.
- Fixed deposit for a duration of five years.
- Sukanya Samariddhi account.
What is standard deduction in salary India?
Income Tax Standard Deduction – Union Budget 2018
Salaried Employees Earning | Standard Deduction Allowed |
---|---|
Annual income from Rs. 75,000 to Rs 5 lakh | Rs 30000 or 40\% of the income, whichever is lower. |
Annual income greater than Rs 5 lakhs | Rs 20000 |
Who is eligible for standard deduction of Rs 40000 from taxable income?
Standard deduction of Rs 40,000 from taxable income is expected to benefit 2.5 crore salaried employees. Pensioners are eligible for standard deduction up to Rs 40,000 from their taxable income, the government clarified on Thursday.
What is the standard deduction for salaried person in India?
While putting forth the union budget of 2018, the Indian Finance Minister announced a standard deduction for a salaried person of Rs. 40, 000. This deduction is in the place of medical reimbursement (Rs. 15,000) and transport allowance (Rs. 19,200).
Are pensioners eligible to claim standard deduction of Rs 40K?
Earlier, Budget 2018 had amended the Finance Act and provided a standard deduction of Rs 40,000 to all salaried individuals in their taxable income. However, there was some confusion as to whether pensioners too are eligible to claim this standard deduction, said an official statement.
What will be the impact of standard deduction on salary income?
For the salaried employees, it would result in lower taxable salary income. The standard deduction replaced transport allowance of Rs 19200 and medical reimbursement of Rs 15000.
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