Standard deduction can be claimed against pension
Monday, April 9, 2018 IST
MUMBAI: The Central Board of Direct Taxes (CBDT), in an official statement released on Thursday, clarified that individuals who receive pension from their former employers will be entitled to claim the standard deduction of Rs 40,000.
Pension received from a former employer is taxable under the head ‘Salary’. The Finance Act, 2018, has introduced standard deduction of Rs 40,000 which is to be allowed against salary income. Thus, taxpayers who receive pension from their former employers will be entitled to claim the standard deduction of Rs 40,000, the CBDT has clarified. If their pension is lower than this figure, then the deduction allowed will be limited to the actual pension received, it adds.
Finance Minister Arun Jaitley had introduced the standard deduction in Budget 2018. This was in lieu of the medical reimbursement (Rs 15,000 per year) and transport allowance (Rs 1,600 per month). Thus, those in employment got a benefit of only Rs 5,800. However, allowability of standard deduction against pension income is a bonanza as pensioners do not receive medical reimbursement or transport allowance benefits.
Related Topics
Trending News & Articles
More in