New Delhi, Apr 5 (PTI) Taxpayers who receive pension from their former employers are eligible to claim standard deduction of Rs 40,000, Income Tax department said today.
Keeping income tax rates and slabs unchanged, Budget 2018-19 introduced Rs 40,000 standard deduction for salaried employees and pensioners in lieu of the exemption in respect of transport and medical expenses that was given till last financial year (2017-18).
The Central Board of Direct Taxes (CBDT) said it had received representations as to whether a taxpayer, who receives pension from his former employer, shall also be eligible to claim this deduction.
“The pension received by a taxpayer from his former employer is taxable under the head ‘salaries’. Accordingly, any taxpayer who is in receipt of pension from his former employer shall be entitled to claim a deduction of Rs 40,000 or the amount of pension, whichever is less, under Section 16 of the (I-T) Act,” CBDT said in a statement.
The standard deduction was discontinued from the assessment year 2006-07, but was re-introduced in 2018-19 Budget.
In 2017-18, no tax was applicable on Rs 19,200 of transport allowance and medical expenditure of up to Rs 15,000. This has now been subsumed into the new standard deduction of Rs 40,000.
This is published unedited from the PTI feed.