Standard deduction on salary income

Section 16, inter-alia, provides for certain deduction in computing income chargeable under the head “Salaries”. it is proposed to allow a standard deduction upto Rs 40,000/- or the amount of salary received, whichever is less. Consequently the present exemption in respect of Transport Allowance (except in case of differently abled persons) and reimbursement of medical expenses is proposed to be withdrawn.

These amendments will take effect from financial year starting from 1st April, 2018 and will, accordingly, apply in relation to the financial year 2018-29 and subsequent financial years.

Extract of Clause 7 and 8 of Finance Bill 2018

Clause 7 of the Bill seeks to amend section 16 of the Income-tax Act relating to deductions from salaries.

The existing provisions of the said section, inter alia, provide that the income chargeable under the head “Salaries” shall be computed after making certain deductions specified therein.

It is proposed to insert a new clause (ia) in the said section so as to provide for deduction of forty thousand rupees or the amount of the salary, whichever is less, for the purpose of computing the income chargeable under the said head.

This amendment will take effect from 1st April, 2019 and will, accordingly, apply in relation to the assessment year 201 9-2020 and subsequent years.

Clause 8 of the Bill seeks to amend section 17 of the Income-tax Act relating to “Salary”, “perquisite” and “profits in lieu of salary” defined.

Clause (v) of the proviso occurring after sub-clause (viii) of clause (2) of the said section provides that any sum paid by the employer in respect of any expenditure actually incurred by the employee on his medical treatment or treatment of any member of his family not exceeding fifteen thousand rupees in the previous year shall not be treated as perquisite in the hands of the employee.

It is proposed to omit the said clause (v).

This amendment will take effect from 1st April, 2019 and will, accordingly, apply in relation to the assessment year 2019-2020 and subsequent years.

[Clause 7 & 8]

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71 Comments

  1. LK Shukla says:

    I am filing ITR-2, in Salary section I have mentioned total salary draw 1215600, but standard deduction showing 40000, & its showing in part B in form 16, total salary 1175600, I am confused I have filled correct or wrong, kindly help us.

  2. Ajay Kumar says:

    Reliance mobile Tower(Anil Ambani) is on my agriculture land. Now the rent of leased land is due since last 3yrs. If I write income on acrual basis every year how can it be adjusted in the year when Reliance will pay full amount at a time?

  3. Priyanshi says:

    if person is salaried for 3 months out of 12 months, he can claim full 40,000 as standard deduction or he can claim only 10,000 (40000/12*3)

  4. Priyanshi says:

    If a person is salaried for 3 out 12 months in FY 18-19 and the receives income from business. For 3 months he claim full 40,000 standard deduction or he will have to claim 10,000 (40000/12*3).

  5. D S Betwar says:

    I am Govt Servant and Tran. allowance received in FY 2018-19 is Rs. 4400/-. Can I eligible for Stranded Deduction for Rs. 40000/-

  6. Bala says:

    I have changed employers in the last financial year 18-19. So now I have 2 form 16 with me. each showing Standard deduction under section 16(ia) as 40,000. In short when I total the deduction amount under section 16(ia), it totals to 80,000. when i try to file the ITR i am getting error like this “Total value across all your salaries cannot be more than Rs. 45,000.”, how to resolve this ?

      1. Ravi Kumar says:

        I am also facing the same issue (Total value across all your salaries cannot be more than Rs. 45,000. Your current total is Rs. 80,000), as i have 2 form 16.

        Please advice.

    1. Mohan Kiran R says:

      In order to validate the error, Reduce it to Rs.40000/-
      As per the Income tax act,
      You can claim only Rs.40000/- as standard deduction in a financial year.
      You cant enjoy double deduction just because you have two employers for the Current year.

  7. Saraz says:

    I worked in first company for 11months and 1 month in other one. I have two form 16. There’s no mention of standard deduction in the 2nd one. How will the standard deduction will be calculated ?

  8. Ashish says:

    I have changed employers in the last financial year 18-19. So now I have 2 form 16 with me. each showing Standard deduction under section 16(ia) as 40,000. In short when I total the deduction amount under section 16(ia), it totals to 80,000. Is that correct ?

  9. A Das says:

    1) If Pension Income is to be booked in Salary income to get 16(ia) SD, where to get mandatory information on the Payee like PAN, date of deposits. etc
    2) How to file STCG in debt funds. ITR -2 only deals with Equity Oriented MFs. So ITR -1 is to be used as such income is added to the Income from Other Sources and taxed as per applicable income tax slab of the filer.

  10. Archana Patange says:

    I was working with a MNC.. Due to some health reason of my family I have to left Job in August 2018. My company is not paid me anything. Now they have calculated my salary and leave encashment @ Rs 10000 and deducted the same under standard deduction. And nullify the salary. My gross salary is Rs 2.89 p. A.

  11. N K Tewari says:

    I am a central Government pensioner. Received total Rs.4 lakhs as pension. Request guide as to whether I am entitled to standrad deduction of Rs.40000/ in financial year 2018-19 AY 2019-20

  12. Mohinder Sharma says:

    Rebate u/s 87A is on the total receipt of 500000/- for that financial year including arrears for the previous years or on the taxable income for that f.a after deducting the deductions under various sections including Sec 89 ie after taking into consideration the relief of Sec 89

  13. Mohinder Sharma says:

    Rebate u/s 87A is on the total receipt of 500000/- for that financial year including arrears for the previous years or on the taxable income for that f.a after deducting the deductions under various sections including Sec 89 .

  14. S.D says:

    Whether,Partner of a Firm is eligible to get the benefit of Standard deduction from his remuneration from the partnership and he payment Professional Tax Rs. 2500/- Yly.

  15. HIMANSU SEKHAR HATI says:

    I am a govt employed,my monthly salary Rs 34880 .Under sec 16(ia) can I deduct standard deduction of Rs 40000 or Rs.34880/- . As the 16(ia) speaks a deduction of forty thousand or amount of salary whichever is less shall be allowed as standard deduction.
    Please clarify

    1. ankit pandey says:

      yes you can eligible for taking credit of standered deduction u/s 16(ia) because your salary is more than std deduction. it is for p.a salary or 40000 whichever is less

    2. Mail8013 says:

      Hello, I have a query pertaining to Standard Deduction.
      I worked for only 2 months in a company in the FY 2018-2019 (Feb-19 & Mar-19). In my salary slip, the monthly conveyance & medical is Rs. 20,000 each. So, for the 2 months, I have received a total of Rs. 40,000 under conveyance and Rs. 40,000 under medical. My total salary for the 2 months (as reported by my employer in form 16) is Rs. 2,20,000/-
      The question I have is: Whether I can claim Rs. 40,000 as standard deduction while filing my IT return ? or would I have to claim a proportionate amount ? If so, how is it to be calculated ?
      (Infact, when I open the ITR 1 after logging into the incometax account, I see Rs. 40,000 coming up automatically against standard deduction along with the salary details. But in my form 16 issued by my company, standard deduction is shown “nil” against Standard deduction u/s 16(ia) ?
      I would request all the experts in this field to kindly clarify my query.
      Thanks, BR, Abi

  16. Pradip Kumar das says:

    I am a govt employed,my monthly salary Rs 50000 and avobe.My younger brother is a physical disabled person and depent upon me.And my mother is a senior citizen of India and suffering from demencia.Under sec 16(ia) standard deduction Rs 40000. Can i rebet income tax of my salary 2019-2020(Assement year) above mention clause?

  17. Mukesh kumar says:

    sir I posted in Uttarpradesh government . I recieved fixed vehicle allowance Rs. 700 per month in assesment year 2019-20.
    kindly tell me vehicle allowance are exempted or not.

  18. DANDEVENKATASUBBARAO says:

    Sir, I am an government employee, I have received gross salary an amount of 630000.00 I can eligible for standard deduction rs. 40,000.00 apart from standard deduction rs 1,50,000.00

  19. ajay says:

    The officer who is availin facility of Staff Car shall be given benefit of standard deduction of rs. 40000 since he is not drawing transport Allowances

  20. Tapinder Singh says:

    I am physically disabled government employee. I receive Rs 1000/- per month i.e. Rs. 12000/- per annum as transport allowance, What amount of standard deduction should I deduct Rs 40000 or Rs 52000( 40000+12000)? can you please share the rule under which it comes as my department is not agreeing with it.

  21. Tapinder Singh says:

    I am a physically disabled government employee. I an recieving tranport allowance of 1000/- per month i.e 12,000/- per annum . So what should be the standard deduction 40,000 or 52,000(40,000+12,000) ? Can you please tell me under which rule we have to take 52,000 as deduction as whole. As our department is not considering it.

  22. Rohit Kumawat says:

    What if we want to take an exemption of transport allowance instead of this standard deduction which is lower than this deduction.

  23. k c bhatt says:

    I am physically disabled person and government employee. I receive Rs 38400 as transport allowance, What amount of standar deduction should I deduct Rs 40000 or Rs 78400 ( 40000+38400)

  24. PARVEEN KUMAR says:

    pls let me know if any employee discontinue in his job. he fully eligible for this deduction (Standard deduction section 16)

  25. C.P.V.RATNAM says:

    We, the pensioners, are grateful to Deepak Dang who observed that standard deduction should be qapplicable to pensioners too.

  26. C.P.V.RATNAM says:

    It is a boon to the pensioners as RS.40,000/- Standars Deduction and the aged pensioners are benefitted early from AY:2017-2018 and thereqafter..

    1. TG Team says:

      That is correct but you can read the same as These amendments will take effect from financial year starting from 1st April, 2018 and will, accordingly, apply in relation to the financial year 2018-19 and subsequent financial years.

  27. NEELESH SONI says:

    Is standard deduction 40000 rs which is announce in budget 2018 …will be effective in AY 2017-2018..????
    means can we deduct 40000 rs from our gross salary this year….????

  28. Makardhwaj says:

    K.Thandavamoorthy says:
    February 2, 2018 at 7:02 pm
    It is effective from 1.4.2019, then it would have been announced in the next budget.

    Reply
    nmb says:
    March 20, 2018 at 12:40 pm
    which means, the provision come into force w.e.f AY 2019-20, ie; FY 2018-19
    I agree with Mr.K.Thandavamoorthy and it should be rectified in article.

  29. Ranjeet Kumar says:

    As per Para 15.13
    The following shall; not be treated as perquisite.
    1. If medical facility provided in a hospital , Clinic or nursing home maintained by the employer.
    2. Reimbursement by the employer, incurred by the employee on his medical treatment in any hospital, maintained by the Govt., Local Authority or in a hospital approved by the Govt.

    In such a case, if the above condition as refereed in para 15.13 is fulfilled, then how the newly introduced slandered deduction will be introduced in the salary? or para 15.13 will be abolished?

    1. Manish Gupta says:

      Only this perquisite will omitted ,In case treatment is taken from a private or unrecognised hospital, the benefit is exempted up to 15,000 p.a

      Rest of perquisites as it is.

    1. vignesh says:

      This deduction is available for income under the head salary.If you receiving Pension then it is chargeable under salary so you can claim Deduction otherwise if you are not have any income under the salary then you not eligible for this deduction.

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