Standard Deduction Of Rs 40,000 Available For Pensioners. Details Here

Standard Deduction Of Rs 40,000 Available For Pensioners. Details Here
Standard deduction of Rs 40,000 from taxable income is expected to benefit 2.5 crore salaried employees.

Pensioners are eligible for standard deduction up to Rs 40,000 from their taxable income, the government clarified on Thursday. Earlier, Budget 2018 had amended the Finance Act and provided a standard deduction of Rs 40,000 to all salaried individuals in their taxable income. However, there was some confusion as to whether pensioners too are eligible to claim this standard deduction, said an official statement. In response, the Income Tax (IT) department clarified that pension qualifies as salary and is thus eligible for standard deduction of up to Rs 40,000, according to an official statement from Central Board of Direct Taxes (CBDT).

"The Central Board of Direct Taxes (CBDT) has clarified that the pension received by a taxpayer from his former employer is taxable under the head "Salaries". The Finance Act, 2018 has amended Section 16 of the Income-tax Act, 1961("the Act") to provide that a taxpayer having income chargeable under the head "Salaries" shall be allowed a deduction of Rs 40,000/- or the amount of salary, whichever is less, for computing his taxable income. Accordingly, any taxpayer who is in receipt of pension from his former employer shall be entitled to claim a deduction of Rs 40,000/- or the amount of pension, whichever is less, under Section 16 of the Act," said the press release.
 

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