New Delhi, Feb 1: After implementing the recommendations of the 7th Pay Commission or 7th CPC, the government on Thursday announced another relief for its employees. Presenting the Union Budget 2018, Finance Minister Arun Jaitley proposed to raise standard deduction to Rs 40,000. After the 7th Pay Commission benefits, the increase in standard deduction will help central government employees to save more money. (Update: 7th Pay Commission: Wait For Minimum Pay Hike Gets Longer as Arun Jaitley Makes no Mention of it in Budget) Also Read - 7th Pay Commission Latest News: Central Govt Employees Likely To Get Salary Hike This Month
The standard deduction of Rs 40,000 is introduced in lieu of transport and medical reimbursements for salaried employees. In his budget speech, Arun Jaitley also said that Rs 8,000 crore revenue lost due to the standard deduction allowed to salaried employees. However, the transport allowance at enhanced rate shall continue to be available to differently-abled persons. Also, other medical reimbursement benefits in case of hospitalisation etc., for all employees shall continue. Also Read - 7th Pay Commission Latest News: Ahead of Diwali, Maharashtra Govt Announces Rs 2000 Allowance For Anganwadi Workers
“Standard deduction shall significantly benefit the pensioners also, who normally do not enjoy any allowance on account of transport and medical expenses,” Arun Jaitley said. For senior citizens, exemption of interest income on bank deposits has also been raised to Rs 50,000 in the Budget 2018. Standard deduction was abolished in 2005. It had allowed a salaried employee to claim a flat deduction from salary income of Rs 30,000 or 40 per cent of salary (if salary did not exceed Rs 5 Lakhs), or a deduction of Rs 20,000 (if salary exceeded Rs 5 lakh). Also Read - 7th Pay Commission Latest News: Ahead of Diwali, Tami Nadu Govt Announces Bonus For Over 2.91 Lakh Employees
While the 7th Pay Commission raised the salaries of the central government employees, the standard deduction will benefit 2.5 crores salaried employees and pensioners.