2 Types Of Standard Deduction in Income tax 2022

 

A Standard Deduction can be described as a deduction in Income Tax that is allowed regardless of the expense or investment made.

As it is allowed at a standard tax rate, no disclosures/investmentproofs/Expense Bills are required to use this type income tax standard deduction.

India has two types of Standard Deductions.

1. Standard Deduction on Rent: Rent Income is subject to a standard deduction of 30%
2. Standard Salary Deduction Salary Income allows for a maximum of 50,000

Standard deduction from rental income @ 30 %

The head Rental Income from House Property includes the rental income. The first step to calculating the Net Annual Value of Rental Income is to reduce the Municipal Tax and other taxes paid by the Local Authority.

No matter what actual expenses are incurred on the property, the Standard Deduction applies to rental income. This Standard Deduction applies to all expenses, including maintenance. The proof of actual expenses is not required.

Rent from multiple properties is eligible for the 30% standard deduction.

It is important that you note that this Standard deduction is not allowed for Rent received from renting a vacant lot.

Standard deduction from the Salary

The standard deduction for Salary of Rs. Budget 2019 introduces the standard deduction from salary of Rs. 50,000. This applies to Financial Year 2019-20.

This deduction can be claimed regardless of whether the employee actually incurred the expense. To claim this deduction, the employee doesn't have to submit any proofs/bills to their employer.

This deduction is in place of Transport Allowance. Employees used to be allowed to claim these benefits, but they had to present bills. Standard Deduction was introduced to replace the deductions for Medical Reimbursement and Transport Allowance.

This is a cumulative deductable and if you have received salary payments from 2 employers within the year, then the maximum standard deduction would remain the same. Rs. 50,000 (in aggregate). The standard deduction could be claimed regardless of whether you have earned salary income from large companies or small businesses.

Other deductions allowable in income tax

You can also deduct several other items, apart from the Standard deduction @ 30%. Some of these Deductions only apply to Salaried Workers, while the rest of them are available to everyone, even Salaried Employees.

Salaried employees only get two deductions, Deduction For Entertainment Allowance or Deduction For Professional Tax. Additional to these Deductions, salaried employees also have several exemptions.