loginmiraclelogisticsThe Standard Deduction applicable for the Fin.Year 2018-19 has nothing to do with the break-up of salary. Rather it's a direct deduction from the gross salary of individuals without linking with any heads/conditions. Of course, by this the direct deductions from gross salary which were available for FY 2017-18 towards Conveyance Allw. (@ Rs.1600 pm + medical allw. of Rs.15000 p.a.) put together =34,200 have been withdrawn, thus our gross salary for IT purpose will be reduced by this SD of Rs.40,000 pa. as against Rs.34,200 for last year (net gain Rs.5,800). To understand this better -
What is a standard deduction? It is a fixed amount of deduction – in this case, an amount of Rs 40,000 which can be reduced by salaried taxpayers, from their gross salary. Interestingly, the provision of Standard Deduction was earlier available but was abolished in the Finance Act 2005. This deduction in deed replace the transport allowance of Rs 1600 per month and medical allowance of Rs 15,000 per annum. They are usually deducted from the gross salary and claimed as an exemption.
Let us understand this with a small example:
Particulars Until AY 2018-19 From AY 2019-20
Gross Salary (in Rs.) 5,00, 000 5,00,000
(-) Transport Allowance 19,200 Not Applicable
(-) Medical Allowance 15,000 Not Applicable
(-) Standard Deduction Not Applicable 40,000
Net Gross Salary (before other deductions-Chap.VI/savings u/s.80 C, D, DD etc.:
From the above, you may note that the taxable salary has come down on account of the standard deduction.
From India, Bangalore