The Income Tax Act is not only provides provisions for imposing taxes on the income of citizens but also offers number of ways through which one can claim deductions and rebates. The deductions are allowed based on the way the taxpayers spend their income. One such deduction offered to salaried individuals is the standard deduction. You must know that salaried individuals and pensioners can claim a certain amount under standard deduction by default without any investment or spending of money by the taxpayers.
The provision was taken down for a number of years and was re-introduced during the Budget announcement in It replaced the transport allowance Rs.
Interestingly, the provision of Standard Deduction was earlier available. However, it was abolished in the Finance Act The standard deduction is usually deducted from the gross salary and claimed as an exemption. This deduction can be claimed by all salaried employees irrespective of category and need of any investment.
The Interim Budget presented on 1 February included numerous tax benefits for the salaried and the middle class. Among them, an additional amount of Rs. With the Standard Deduction being Rs 50, now, it will help taxpayers immensely to reduce their tax outgo Let us understand this with a small example:.
From the above, it is evident that the taxable salary has come down on account of the standard deduction. Therefore, the taxpayer can claim a standard deduction of Rs. Tax Security. What Is the Standard Deduction? Key Takeaways The standard deduction is the portion of income not subject to tax that can be used to reduce your tax bill. You can choose between a standard deduction and itemized deductions. The amount of your standard deduction is based on your filing status, age, and other criteria.
Article Sources. Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy. Compare Accounts. The offers that appear in this table are from partnerships from which Investopedia receives compensation.
This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace. Related Terms Form U. Individual Tax Return Form is the standard U. What Is a Deductible? For tax purposes, a deductible is an expense that can be subtracted from adjusted gross income in order to reduce the total taxes owed.
What Is a Joint Return? A joint return is a U. Mortgage Interest Deduction A mortgage interest deduction allows homeowners to deduct mortgage interest from taxable income. Read who benefits from a mortgage interest deduction.
Partner Links. Related Articles. Who Gets the Deductions and Credits? Investopedia is part of the Dotdash publishing family. What is the IRS Form ? Estimate your tax refund and where you stand Get started. See if you qualify for a third stimulus check and how much you can expect Get started. Easily calculate your tax rate to make smart financial decisions Get started. Estimate your self-employment tax and eliminate any surprises Get started.
Know what dependents credits and deductions you can claim Get started. Know what tax documents you'll need upfront Get started. Learn what education credits and deductions you qualify for and claim them on your tax return Get started.
The above article is intended to provide generalized financial information designed to educate a broad segment of the public; it does not give personalized tax, investment, legal, or other business and professional advice. Skip To Main Content. What Are Standard Tax Deductions? Standard deduction amounts The amount of your standard deduction depends on the filing status you qualify for. Standard deduction increases The federal income tax system increases the standard deduction for taxpayers who are age 65 or older, blind, or both.
Special situations Some taxpayers cannot take the federal standard deduction. Standard deduction vs. All you need to know is yourself Just answer simple questions about your life, and TurboTax Free Edition will take care of the rest. Looking for more information?
0コメント