New Delhi: Finance Minister Arun Jaitley did not provide any relief in the income tax rates in the Union Budget 2018-19. He however proposed to allow a standard deduction of Rs 40,000 in lieu of the present exemption in respect of transport allowance and reimbursement of miscellaneous medical expenses.
The government decision has also led to speculations about how individuals can claim the tax benefit under the standard deduction.
Central Board of Direct Taxes (CBDT) Chief Sushil Chandra has said that salaried taxpayers and pensioners will not have to furnish any bills or documents to claim the standard deduction of Rs 40,000 announced in the budget.
The deduction of flat Rs 40,000 will be applicable to every salary earner and they can straightaway claim it, Chandra said.
Till now, these category of taxpayers had to furnish medical bills and an undertaking for conveyance expenses to get benefit of Rs 19,200 under transport allowance and Rs 15,000 crore under the medical allowance.
It is to be noted that the transport allowance at enhanced rate shall continue to be available to differently-abled persons. Also, other medical reimbursement benefits in case of hospitalisation etc., for all employees shall continue.
Jaitley has said that the total number of salaried employees and pensioners who will benefit from this decision is around 2.5 crore.
Experts believe that the move to announce standard deduction of Rs 40,000 apart from reducing paper work and compliance, will help middle class employees even more in terms of reduction in their tax liability. This decision to allow standard deduction shall significantly benefit the pensioners also, who normally do not enjoy any allowance on account of transport and medical expenses.
FM Jaitley, giving it to popular demand, has re-introduced standard deduction after more than a decade.
Taking into account the recommendations of the Kelkar Committee on direct taxes, the then finance minister P Chidambaram had announced abolition of standard deduction in the Budget 2005-06. It was abolished with effect from 1 April, 2006.
With Agency Inputs