Reintroduction of standard deduction for salaried assessees under Section 16

Issue/Justification

Salaried employees are not allowed deduction of any expenses incurred during the course of the employment other than profession tax on employment.

There are various expenses that the employees incur during the course of employment which they cannot claim as deduction.

At the same time, the few exemptions that are available to them u/s 10 are subject to upper limits which have been fixed several years back and virtually serve no purpose on account of inflation.

Employees during the course of their employment incur various expenses, including for upgrading skill, for rendering their services as employees, deduction for such expenses should be allowed. For avoiding leakage of revenue if any such deduction maybe a fixed sum or certain percentage of salary, say 25% of the salary, but maximum may be restricted upto say Rs. 5,00,000/- .

Doing away with the multiple exemptions will help in cleaning up the Act and removing unwieldy provisions – thereby simplifying the law.

Suggestion

Provisions similar to that of erstwhile standard deduction may be re-introduced. Simultaneously, the multiple exemptions that are available (with miniscule upper limits) may be done away with.

Source-  ICAI Pre-Budget Memorandum–2018 (Direct Taxes and International Tax)

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Category : Income Tax (27492)
Type : News (13631)
Tags : Budget (1956) ICAI (2600)

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