The standard deduction available for salaried income tax payers and pensioners is likely to increase in the upcoming Budget 2024.
It has become the default option unless opted out of.
Standard deduction for income tax payers
It is a fixed amount that salaried employees and pensioners can deduct from their taxable income without providing proof of expenses. Currently, it is Rs 50,000.
An increase in the standard deduction will be a relief for taxpayers as inflation has increased, thereby raising the cost of living.
Moreover, in the new tax regime, most deductions and exemptions available in the old tax regime are currently unavailable.
As the standard deduction is applicable in the new tax regime too, it can be beneficial for those opting for it.
Rebate under Section 87A
Apart from the standard deduction for the income tax payers, the rebate under Section 87A was increased to Rs 7 lakh under the new tax regime in the 2023 budget.
Following the rise in the rebate, individuals whose taxable income does not exceed Rs 7 lakh are exempt from paying taxes under the new tax regime.
Though it is unlikely that the rebate will increase, the standard deduction is expected to rise in Budget 2024.
