Last ten days are left for tax payment. In such a situation, the taxpayers are engaged in paying it as soon as possible. Tax can be exempted as standard deduction before payment.
Income tax: There is little time left to avail tax rebate in the financial year 2022-23. In such a situation, if someone is salaried, then the first question that comes for him is how to take advantage of tax exemption. Some of the benefits in the new tax regime can be claimed in the form of standard deduction.
The Income Tax Act of 1961, Section 16(ia), allows a deduction up to a maximum of Rs 50,000 to every salaried taxpayer. Also, the standard deduction will be available to taxpayers receiving pension income, but the question arises as to how this can be claimed. So let’s understand its complete calculation.
How much deduction will be available
In the form of tax deduction, taxpayers who opt for the old tax regime get the option of standard deduction. At the same time, in the Budget 2023, it has been proposed to allow standard deduction for taxpayers opting for the proposed new tax regime under Section 115BAC of the Income Tax Act in the financial year 2023-24. The standard deduction would be something like this.
It is proposed to allow the deduction. The standard deduction would be something like this.
| Description |
salaried taxpayer |
pensioner tax payer |
| gross pay/pension | 10,00,000 | 7,50,000 |
| House rent allowance | (1,20,000) | |
| Travel allowance | (80,000) | |
| net salary | 80,00,000 | 7,50,000
|
| Less: Deductions under section 16 | ||
| Standard deduction under section 16(ia) | (50,000) | (50,000) |
| Professional tax under section 16(iii) | (2,500) | |
| Income taxable under the head ‘Salaries’
|
7,47,500 | 7,00,000 |
Discount on pension
Senior citizens and very senior citizens are given pension as a source of income and some tax has to be paid on it. In this case, for senior citizens who are below 80 years of age, the basic exemption limit is Rs 3 lakh. Whereas, for very senior citizens who are above 80 years, the basic exemption limit is Rs 5 lakh per annum. Thus, no tax has to be paid for filing returns up to this limit.
Under Section 16 of the IT Act, pensioners are entitled to claim a deduction of Rs 50,000 per annum or the amount of pension, whichever is less. Explain that the standard deduction is calculated on the basis of various factors like basic salary, perquisites, alliance, rent allowance and other non-taxable and taxable charges. Also, tax savings can also be done through insurance options like NPS, PF, FD.
