New Delhi: The Finance Ministry once again gave the benefit of standard deduction i.e. standard deduction to the people after 13 years in the 2018 budget. The standard deduction is a deduction or exemption that occurs personally on your investment and expenses. Actually it is the amount which is deducted directly from your own income (deducted). The remaining income is calculated according to the tax slab. Prior to the 2005 budget, its benefits had been available to the employees but in the 2005 budget, it was scrapped.
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According to the budget of 2018, according to the rule, the employees were required to pay tax only after deducting 40 thousand rupees from their salary. But the government, in its turn, ended the transport allowance and medical reimbursement facility. Till then, people used to get a tax exemption of Rs 19,200 as transport allowance and up to Rs 15,000 in the form of medical reimbursement. Meaning that due to this decision of the government, people were able to get the benefit of tax exemption on a total of Rs 5,800 only. In the budget of 2019, the standard deduction limit was increased to Rs 50,000 thousand, after which people got relief.
In the example, you can see that if your salary is Rs 8 lakh, then after standard deduction, you will have to pay tax on Rs 7.5 lakh only. Standard deduction benefits are provided equally to both pensioners and salaried citizens. After this, people got rid of the problem of submitting different papers of medical reimbursement and transport allowance.
