In the recent Union Budget 2023-24, a standard deduction of ₹50,000 was introduced under the new tax regime, which was previously available only under the old tax regime.
The Finance Minister Nirmala Sitharaman said, “My third proposal is for the salaried class and the pensioners, including family pensioners, for whom I propose to extend the benefit of the standard deduction to the new tax regime. Each salaried person with an income of ₹15.5 lakhs or more will thus stand to benefit by ₹52,500.”
This statement in the Budget Speech caused a lot of confusion among taxpayers regarding the amount of the standard deduction, whether it is ₹50,000 or ₹52,500
The FM’s previous statement was simply an illustration of the possible impact if standard deduction is to be introduced in the New tax regime. However, as per the Finance Bill and the CBDT (Central Board of Direct Taxes), the standard deduction is ₹ 50,000 and not ₹ 52,500.
Confirming the same, CBDT chairman Nitin Gupta, in his post-budget clarifications, said that standard deduction would be available for all taxpayers irrespective of their income level. This can be claimed by all salaried employees and pensioners.
How much standard deduction will salaried individuals get?
Salaried Employees will get a Standard deduction is ₹ 50,000 (not ₹ 52,500).
How much standard deduction will pensioners get?
Pensioners will get a standard deduction on family pension of: ₹15,000 or 1/3rd of pension, whichever is lower.
How much is the tax-free income under new tax regime after Budget 2023?
Considering the standard deduction and rebate, the effective tax-free income for salaried taxpayers under the new regime is ₹ 7.5 lakhs. While for others, it is ₹ 7 lakhs.
For any clarifications/feedback on the topic, please contact the writer at ektha.surana@clear.in
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