Union Finance Minister Nirmala Sitharaman presented the Union Budget for Fiscal Years 23-24 on 1st Feb 2023.
Standard deduction of Rs. 50,000/- will be available to salaried workers and pensioners, & a standard deduction of Rs. 15,000 or one-third of the family pension, whichever is less, will be available to family pensioners, regardless of income level.
The FM made five major announcements. One of the most significant changes in personal taxation is the extension of the standard deduction and family pension benefits to the new tax regime. As a result, the new tax regime becomes even more appealing.
This proposal is for the salaried class and retirees, especially family pensioners, for whom Government has propose extending the benefit of the standard deduction to the new tax regime. Thus, each salaried individual making at least Rs. 15.50 Lakhs will stand to gain Rs. 52,500.
Many articles and news portals reported that the standard deduction of 52,500 would only be available to salaried individuals with incomes equal to or greater than 15.5 lakhs, confusing both the general public and professionals.
The right way to view this assertion suggests otherwise.
Pensioners and members of the salaried class will be eligible for a standard deduction of 50,000.
Family pensioners will be able to take a standard deduction of Rs. 15,000 or 1/3rd of their family pension, whichever is less.
The figure Rs. 52,500 represents the tax benefit that one will receive under the new tax regime with the proposed new tax slab on an income of 15.5 lakhs.
Taxes on an income of 15.5 lakhs under the New Tax Regime.
Particulars | New scheme pre budget | New scheme post budget |
Income | 15,50,000 | 15,50,000 |
Less: standard deduction | Nil | 50,000 |
Taxable income | 15,50,000 | 15,00,000 |
Tax payable | 2,02,500 | 1,50,000 |
Net benefit | | 52,500 |
We hope the above blog was helpful in enhancing your knowledge on the matter. In case of any queries feel free to get in touch with our team of experts.
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