New Delhi: Giving a relief to salaried class, Finance Minister Arun Jaitley today proposed a standard deduction of Rs. 40,000 in lieu of transport allowance and medical reimbursement entailing a revenue sacrifice of Rs. 8,000 crore. The minister, however, did not propose any change in the tax slabs or rates for individual taxpayers.

“In order to provide relief to salaried taxpayers, I propose to allow a standard deduction of Rs. 40,000/- in lieu of the present exemption in respect of transport allowance and reimbursement of miscellaneous medical expenses,” Jaitley said while presenting the Budget 2018-19 in Parliament today.

The standard deduction, which is provided to salary earners, was discontinued from the assessment year 2006-07.

Experts, however, said that it is a very nominal benefit to the salaried class.

“Standard deduction of Rs. 40,000 p.a. for salaried individuals seems to be a very nominal benefit as the current tax-free limit for medical expense reimbursement of 15,000 p.a. and transport allowance exemption of Rs. 1,600 p.m. is anyway leading to a total tax-free salary of Rs. 34,200 p.a.,” Alok Agrawal, Senior Director, Deloitte India said.

The finance minister said the government had made many positive changes in the personal income-tax rate applicable to individuals in the last three years.


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