Union Budget 2024-25: What is standard deduction for salaried individuals?

As the countdown for Union Budget 2024-25 has started, there are speculations that the government may increase the standard deduction limit, which is presently ₹50,000.

A news report claimed Finance Minister Nirmala Sitharaman in her budget speech on July 23 can announce an increase in standard deduction limit to ₹1 lakh, providing much needed relief to salaried individuals.

What is standard deduction?

Simply put, the standard deduction is a flat deduction that a taxpayer can subtract from the total salary in a particular financial year. All salaried individuals are entitled to the standard deduction, which is available for both new and old tax regimes.

In Union Budget 2018, former Finance Minister Arun Jaitley had introduced a standard deduction of ₹40,000, which was increased to ₹50,000 by Nirmala Sitharaman in Budget 2019.

According to a CNBC Awaaz report, the government is considering increasing the standard deduction to ₹1 lakh, which could benefit all salaried taxpayers.

Trade association ASSOCHAM urged government to give relief to taxpayers, mainly in the lower income groups, to increase consumption.

"Rationalise and simplify the tax system to improve compliance and promote investment. Consider measures such as reducing corporate tax rates, phasing out tax exemptions, and broadening the tax base to make the tax regime more efficient and equitable," it said.

Meanwhile, Prime Minister Narendra Modi will meet eminent economists on July 11 for their views and suggestions for the forthcoming Budget.

In addition to sectoral experts and economists, NITI Aayog Vice Chairman Suman Bery and other members will attend the meeting.

In her address to the joint sitting of Parliament last month, President Droupadi Murmu suggested that the upcoming Budget will be historic and accelerate the pace of reforms.

She said the Budget would have a futuristic vision and far-reaching policies.