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Business News/ Money / Personal Finance/  How salaried employees and pensioners can benefit from standard deduction hike?
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How salaried employees and pensioners can benefit from standard deduction hike?

In her budget speech, Sitharaman promised a rise in the annual standard deduction from Rs. 50,000 to Rs. 52,000.

Currently, the government is giving a standard deduction of Rs. 50,000/- only to salaried employees and pensioners who have opted for the old tax regime.Premium
Currently, the government is giving a standard deduction of Rs. 50,000/- only to salaried employees and pensioners who have opted for the old tax regime.

In her budget speech, Sitharaman promised a rise in the annual standard deduction from Rs. 50,000 to Rs. 52,000. This declaration has been made for the salaried class as well as pensioners, family pensioners included, for whom FM Nirmala Sitharaman has extended the advantage of the standard deduction to the new tax regime. Hence, any salaried individual earning 15.5 lakh or more will be eligible to receive a benefit of 52,500.

Commenting on the announcement, Nikhil Sharma, Chief Revenue Officer at Fintoo said “Currently, the government is giving a standard deduction of Rs. 50,000/- only to salaried employees and pensioners who have opted for the old tax regime. In the Budget 2023, it is proposed to extend this benefit to the new tax regime as well. Thus, in comparison to the previous new tax regime, this will give an additional disposable income of Rs. 37,500/- to taxpayers with an income of Rs. 7.5 lacs. Similarly, a benefit of Rs. 52,500/- to the taxpayers with an income of Rs. 15.5 lacs and above. Therefore, considering Rebate u/s 87A and Standard Deduction u/s 16, all salaried employees and pensioners with an income of up to Rs. 7,50,000/- will not have to pay any tax."

Mr. Abhishek Dev, CEO and Co-Founder, Epsilon Money Mart said “Simplification of Tax structure , higher rebates and reduction in effective / aggregate tax rates are all welcome moves in this very balanced and growth oriented budget. This will help both savings and consumption which is good for the economy. This also shows the strong confidence that the government has in growth which is a big positive."

Archit Gupta, Founder and CEO, Clear said “Pensioners opting for new tax regime will have the benefit of Standard deduction, besides lower tax rates. For receiving leave encashment on retirement, exemption limit enhanced to 25 lakh from 3 lakh."

Furthermore, in terms of personal taxation, FM has also made major announcements in Budget 2023 such as a hike of the rebate limit to 7 lakh from 5 lakh under the new tax regime, reducing the number of slabs to five and increasing the tax exemption limit to 3 lakh from 2.5 lakh, reducing the highest surcharge rate from 37 per cent to 25 per cent in the new tax regime, hiking the limit for tax exemption on leave encashment from 3 lakhs to 25 lakh.

Dr. Suresh Surana, Founder, RSM India said “Overall, the Finance Budget 2023 is positive and has aimed to benefit middle & lower income class of persons and tax payers at large would go for the default new tax regime based on revised slabs and reduced number of slabs coupled with standard deduction."

Mr. Abhishek Dev, CEO and Co-Founder, Epsilon Money Mart said “Simplification of Tax structure , higher rebates and reduction in effective / aggregate tax rates are all welcome moves in this very balanced and growth oriented budget. This will help both savings and consumption which is good for the economy. This also shows the strong confidence that the government has on growth which is a big positive."

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.

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ABOUT THE AUTHOR
Vipul Das
Vipul Das is a Digital Business Content Producer at Livemint. He previously worked for Goodreturns.in (OneIndia News) and has over 5 years of expertise in the finance and business sector. Stocks, mutual funds, personal finance, tax, and banking are among his specialties, and he is a professional in industry research and business reporting. He received his bachelor's degree from Dr. CV Raman University and also have completed Diploma in Journalism and Mass Communication (DJMC).
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Published: 03 Feb 2023, 09:10 PM IST
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