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Standard Deduction of 50000 & other Deductions from Salary
(applicable w.e.f 01-04-2020)

Standard deduction is increased to 50,000 from financial year 2019-20 ie for the assessment year starting on 1st April 2020. While comparing the tax liability under old tax regime and under new tax regime, take standard deducion at the enhanced figure of
50000.



From Assessment Year 2019-20 (Financial Year 2018-19) clause (ia) was inserted to Section 16 of the Income Tax Act to provide for standard deduction of 
40,000 from salary income. The amount of Standard Deduction s increased to 50,000 from 1st April 2020 ie. financial year 2019-20.

The deduction of medical reimbursement of upto
15,000 and transport allowance of upto 19,200 is replaced with the standard deduction of 40,000. Overall an additional benefit of 5800 comes in the pocket of salaried people.

Deductions from Salary as per Section 16:

Standard Deduction - Section 16 (ia)

From financial year 2018-19 provision of standard deduction  of 40000 from salary has been brought back for all salaried class.

Deduction will be ₹50000 from financial year 2019-20.

Standard deduction was introduced and the earlier provision medical allowance and transport allowances were removed. So for the financial year 2018-19 a fixed amount of 40000 is eligible as deduction from salary.

For FY 2019-20 50000 is eligible as standard deduction.

Read in detail about the Old & New Tax Regimes and decide about which tax regime you should opt for?

Deduction for Entertainment allowance- Section 16(ii)

In case of Government Employees a deduction of
  • 5000 or 
  • 1/5th of salary (excluding any allowance, benefit or perquisites)
whichever is less is admissible as deduction from salary towards entertainment allwoance provided by employer.

Deduction of Tax on employment - Section 16(iii)

A deduction of tax on employment of any amount if any paid by assessee is also admissible as deduction from salary.

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