Standard deduction of ₹50,000 will be available to salaried class and the pensioners and standard deduction of ₹15,000 or 1/3rd of the family pension whichever is lower, will be available to family pensioners, irrespective of any level of income.
Union Finance Minister Nirmala Sitharaman on Wednesday presented the Union Budget for FY 23-24. As people waited for the announcement on most awaited segment, in the words of Union Finance Minister Nirmala Sitharaman ” Now, I come to what everyone is waiting for – personal income tax”, the FM made five major announcements. One of the major changes in personal taxation is to extend the benefit of standard deduction and family pension to New tax regime as well. Thus making new tax regime further attractive.
The Finance Minister proposed ” My third proposal is for the salaried class and the pensioners including family pensioners, for whom I propose to extend the benefit of standard deduction to the new tax regime. Each salaried person with an income of ₹15.5 lakh or more will thus stand to benefit by ₹52,500.”
With this surfaced a lot of confusion as many articles, news portal suggested that the standard deduction of ₹52,500 will be available but only for salaried people having income equal to or more than ₹15.5 Lakhs, thus confusing the general public and professionals alike.
The correct interpretation of the statement says otherwise.
- Standard deduction of ₹50,000 will be available to salaried class and the pensioners
- Standard deduction of ₹15,000 or 1/3rd of the family pension whichever is lower, will be available to family pensioners,
- irrespective of any level of income.
Yes, you read it right.
The figure ₹52,500 is the tax benefit that one will get under new tax regime with new tax slab (as proposed) on income of ₹15.5Lakhs
To understand clearly let’s do some taxes on income of ₹15.5 Lakhs under New tax regime
| Particulars | Old Tax slab | New Tax slab ( as proposed in Budget 2023) |
| Income | 15,50,000 | 15,50,000 |
| Less: Standard deduction | Nil | 50,000 |
| Taxable income | 15,50,000 | 15,00,000 |
| Tax payable | 2,02,500 | 1,50,000 |
| Net benefit | 52,500 | |
This interpretation further find its strength from the ” Annexure to Part B of the Budget Speech 2023-24, Point A.6″. This states ” Standard deduction of ₹50,000 to salaried individual, and deduction from family pension up to ₹15,000, is currently allowed only under the old regime. It is proposed to allow these two deductions under the new regime also.” [ Refer link: https://www.indiabudget.gov.in/doc/budget_speech.pdf ]
Disclaimer : This article is solely for educational purpose and cannot be construed as legal and professional opinion. It is based on the interpretation of the author and are not binding on any tax authority. Author is not responsible for any loss occurred to any person acting or refraining from acting as a result of any material in this article.
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Whether benefit under section 80DD is still available in the new tax regime?.
No, no such deduction is available.
AS LEGAL HEIR OF MY MOTHER , MYSELF FILING TAX RETURN FOR THE LATE SENIOR CITIZEN MOTHER AFTER HER DEATH IN APRIL 2019. ( AS SUGGESTED BY CPC B’LORE).
RECENTLY DECEASED TOTAL FD INTEREST LEVEL HAS GONE MUCH BELOW RS.100000/-.
THE TOTAL INCOME IS TAX EXEMPT.
DO I HAVE TO CONTINUE RETURN FILING FOR F.Y. 2022-23 AND NEXT YEARS.
PLEASE SUGGEST.
WITH THANKS.
C.DAS.
GARIA. KOLKATA -700084
In my opinion you were required to file ITR of your late mother just for the year in which she died , after that you should have closed the FD by submitting death certificate to the bank. Withdrawal amount will not be taxable in your hand being the nominee or legal heir. Do not file return from now onwards. Please take a second opinion as well from some professionals and bank.
I am not clear on tax calculations for family pensioners. Could this be explained with an example such as, Say family pension 285000, Interest income 100000. What would be income tax per new regime for AY 24-25.
In the new tax regime , family pension deduction upto ₹15000 is now available just like in the case of old tax regime. Family pension further get taxable under the head income from other source.
Coming to your example , if yearly pension is 285000 and Interest 100000, then in the new tax regime as it is below 7lakhs , there is total rebate and you will not pay any tax. Deduction doesn’t matter.
If its 285000 monthly, then yearly pension is 34,20,000 on which 15000 you can claim as deduction of family pension and will be paying tax on the rest as per the proposed tax slab.
Thanks for explaining. In the example of Rs 285000 yearly family pension and Rs100000 interest income, the family pensioner is not Indian resident. Therefore rebate for less than Rs700000 income does not apply. That is why I asked the question on tax liability.
Regards.
Why no std deduction less (deducted) in old tax regime ?
Both tax calculations shown in example have been done in New tax regime. One following the old Tax slab where there were rates 5%,10%,15%,20%,25%,30% with no standard deduction while the other is with New tax slab as proposed in this budget I.e 5%, 10,15%,20%,30% with standard deduction.
In old tax regime the rates are 5%,20% and 30% with standard deduction. I have not calculated taxes in old tax regime.
Hope you got the understanding