With India’s Budget announcement round the corner, every tax payer longs for some pleasing announcements to be made by the government.
The best examples are the hike in the standard deduction and new ways to save tax.
The standard deduction is actually a relief allowed in gross salary income for salaried individuals and pensioners by the government under the rules.
Although the standard deduction affects every individual, whether one has opted for old or new tax regime, the ways to save tax, such as kids’ education, belong to only the people, who have gone for old regime.
This year would not be any different. The citizens of the country have already pinned hopes on the Indian Finance Minister’s announcement about the Budget in this regard.
Till now, the standard deduction for salaried taxpayers, who are below the age of 60 years, is Rs 2,50,000. The rate is same for both tax regimes, new and old.
In the old tax regime, the deduction is Rs 3,00,000 for taxpayers above 60 years of age and Rs 5,00,000 for people above 80 years of age. In new regime, the deduction is Rs 2,50,000 for everyone.
Another standard deduction of Rs 50,000 is allowed for every individual going for old regime as per rules.
The deduction for the children’s tuition fee comes under section 80C and has a limit of Rs 1,50,000.
The raising of these limits by around 20% would be warmly welcomed by citizens as they have been witnessing tough times for last two years due to coronavirus pandemic.
The hike in the above limits would also encourage people to do more savings for future. If the government comes up with a tax relief related to COVID-19, the citizens will get the much-needed respite.
(With inputs from agencies)