Biting the bullet of a populist budget, the interim budget 2019 also enhanced the standard deduction limit for the salaried tax payers to ₹50,000.
A standard-deduction reduces your taxable income thereby reducing your tax liability. Standard deduction was re-introduced last year and the limit was set at ₹40,000 and was applicable in lieu of transport allowance and medical reimbursements that totaled up to ₹34,200 in a year. So the actual relief to tax payers were marginal. It was about ₹1,810 for someone in the highest tax bracket of 31.2%.
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This budget the standard deduction has been enhanced from ₹40,000 to ₹50,000. This increase of ₹10,000 will result in tax savings of ₹3,120 for individuals in the highest tax bracket of 31.2% excluding surcharge.