Budget 2024: Good News! Standard Deduction Limit Likely to Increase to THIS Much

Budget 2024: As the Interim Budget 2024 approaches, middle-class taxpayers are hopeful for a boost in standard deduction to Rs 90,000 from the current Rs 50,000. This potential move by Finance Minister Nirmala Sitharaman could significantly alleviate the tax burden on salaried individuals, providing much-needed income tax concessions.

Standard Deduction: A Crucial Aspect of Income Tax Savings

The Income Tax Act incorporates various avenues for deductions and rebates, and one crucial benefit for salaried individuals is the standard deduction. Currently standing at Rs 50,000, this deduction allows a flat reduction from the total salary earned in a financial year. In the new tax regime, salaried taxpayers became eligible for the Rs 50,000 standard deduction from the financial year 2023-24.

Awaiting Revision After Five Years

The last revision to the standard deduction occurred nearly five years ago in 2019. With the upcoming Interim Budget 2024, there is a palpable expectation among the middle class for the government to introduce tax sops. Reports suggest that the standard deduction might witness a significant increase to Rs 90,000, providing substantial savings for taxpayers.

Prospective Increase and Its Rationale

Many tax experts express optimism about the potential increase to Rs 90,000, aligning with the prevailing economic landscape. The necessity for this adjustment is underscored by several factors:

1. Rising Inflation: The existing standard deduction appears insufficient in light of escalating living costs due to uncontrolled inflation.
2. Equity in Tax Benefits: Aligning the standard deduction with benefits for business or profession earners ensures fairness in tax benefits.
3. Work-from-Home Dynamics: The shift towards remote work has led to increased spending on home office infrastructure, necessitating a higher standard deduction to offset these expenses.
4. Rise in Indirect Taxes: A heightened standard deduction would empower salary earners to spend more, indirectly contributing to increased government GST revenue.

Eligibility Criteria for Standard Deduction

The standard salary deduction is applicable to individuals receiving salary and pension, excluding business owners. However, certain exceptions exist, including:

• Married individuals filing separately if the spouse itemizes deductions.
• Taxpayers with dual status or non-resident alien status during a specific fiscal year.
• Taxpayers filing returns for a period less than one year.

As the anticipation builds, taxpayers await the Interim Budget 2024 with hopes of a substantial increase in standard deduction, providing financial respite and reflecting the evolving economic landscape.

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