INVC NEWS
New Delhi : When it comes to filing your Income Tax Return (ITR), there are several important considerations to keep in mind. Ensuring accuracy and attention to detail is crucial as even a small mistake can lead to unnecessary trouble. One aspect that taxpayers should be aware of is the opportunity to claim tax deductions, including the standard deduction. By leveraging this provision effectively, you can significantly reduce your tax liability and optimize your finances. In this comprehensive guide, we will delve into the intricacies of claiming tax deductions while filing your ITR, particularly focusing on the recently reintroduced standard deduction.
Understanding the Application Process
To initiate the process of claiming tax deductions, you must file your ITR through the official Income Tax website. When filling out your return, it is essential to enter the amount of the standard deduction accurately. If you are a salaried individual, this deduction can prove highly advantageous. Remember, you can only claim the standard deduction at the time of filing your ITR, so it is crucial to be diligent in doing so.
Determining the Claimable Amount
Salaried individuals can avail themselves of the standard deduction, which amounts to Rs 50,000. However, it is essential to note that this deduction can only be claimed after considering expenses related to medical and transport allowances. The provision is applicable to salaried employees across various sectors, including private companies, government institutions, and non-governmental organizations. To illustrate the impact of this deduction, let’s consider an example: If you have a tax liability of Rs 1 lakh, claiming the standard deduction would reduce your tax payable to just Rs 50,000. It is worth mentioning that individuals with their own businesses are ineligible for this particular benefit.
The Government’s Rationale for Reintroducing the Standard Deduction
The concept of a standard deduction was initially introduced in India following its independence in 1947. However, the government decided to discontinue this provision temporarily. In the Union Budget of 2018, the standard deduction was reintroduced, aiming to reduce the tax burden on taxpayers. This deduction offers a significant reduction in tax liability. In the current financial year of 2023-24, taxpayers have the option to choose between two tax regimes. Even if you opt for the new tax regime, you can still take advantage of the standard deduction.
