As Budget 2024 approaches, taxpayers eagerly anticipate Finance Minister Nirmala Sitharaman‘s first budget under Modi ‘3.0’. One highly anticipated change is the potential increase in the standard deduction limit for salaried individuals, currently fixed at ₹50,000. Speculation points to a moderate adjustment in the upcoming Union Budget 2024, potentially raising the limit between ₹60,000 and ₹1,00,000.
Will the Standard deduction be increased in this budget?
Personal finance experts are optimistic about a potential increase in the standard deduction limits.
According to Ashish Aggarwal, Director at Acube Ventures, the current deduction of ₹50,000 introduced in 2018-19 could moderately increase to ₹60,000 or possibly ₹70,000, which would be welcomed by salaried employees as it lowers their taxable income.
Gaurav Singh Parmar, Associate Director at Fincorpit Consulting, noted significant interest in a potential rise in the standard deduction, currently set at ₹50,000. “Expectations suggest it could increase to ₹75,000 or even ₹1,00,000,” said Parmar.
Abhishek Soni, CEO and Co-founder of Tax2win, highlighted that increasing the standard deduction could benefit taxpayers across lower and middle-income brackets by reducing their taxable income and overall tax liability.
Additionally, Soni mentioned that boosting the standard deduction aims to stimulate consumer spending and support economic recovery while maintaining fairness in the tax burden across different income levels.
Divya Baweja, Partner at Deloitte India, emphasized the high expectations of the salaried class from the upcoming budget, suggesting potential measures like reducing the highest tax rate under the new tax regime and enhancing the attractiveness of the standard deduction beyond its current ₹50,000 threshold.
What is standard deduction?
Employees can claim a standard deduction of up to ₹50,000 in a financial year against any taxable income categorized under “Salaries.” This deduction applies to the salary received, whether in arrears, in advance, or for the current period.
The standard deduction was first introduced at ₹40,000 in the 2018 budget and subsequently raised to ₹50,000 in the 2019 budget. The deduction amount has not changed since then.
Additionally, Megha Jain, a tax expert at ClearTax, remarked that this benefit was extended to taxpayers under the new tax regime in Budget 2023.
Disclaimer: The views and recommendations made above are those of individual analysts, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.