2 Types Standard Deductions for Income Tax in 2022

 

A Standard Deduction, which is basically an Income Tax deduction, can be used regardless of the amount spent or the investment made.

Because this income tax standard deduction is allowed at a normal rate, it does not require disclosures or investment proofs/ expense bills.

India has 2 types standard deductions.

1. Standard Deduction of Rent: Standard deduction @ 30% for Income from Rent
2. Standard deduction from salary: Standard deduction of Rs. Salary Income is permitted to deduct 50,000

Rent Income: Standard Deduction @ 30%

The Head income from house property covers Rental Income. Renter income is the first to be allowed to reduce the amount of Municipal and other taxes paid directly to the Local Authority in order to reach the Net Yearly Value.

Rental income is subject to the standard deduction regardless of actual expenses. This Standard deduction covers expenses like maintenance and repairs to keep the property in a good condition. Documentation of actual expenses is not necessary.

Rent received from multiple properties can be deducted 30%.

This Standard Deduction is allowed only from Rent received when renting an apartment/building. It is not permitted from Rent received from renting of vacant Land .

Standard Deduction from Salary

The standard deduction from Salary, Rs. Budget 2019 introduced the standard deduction for Salary of Rs.50,000. It will be in effect for Financial Year 2019-20.

This deduction is available regardless of the actual expense incurred. This deduction can be claimed by the employee without proof or receipts.

This deduction has been made in lieu of Transport Allowance. These benefits were allowed to employees previously. To claim these benefits, employees were required submit bills. The Standard Deduction and the Transport Allowance deduction have been removed.

This is a cumulative tax and if there are 2 employers you have received salary during the year the maximum standard deduction will remain the same, i.e. Rs. 50,000 (in aggregate). It doesn't matter if the income came from a large or small company, the standard deduction will be allowed.

Other deductions are allowed under income tax

The Standard Deduction @30% is the only deduction allowed. There are other deductions. Some of these Deductions apply only to Salaried Staff, but all other deductions are open to everyone, including Salaried Employees.

Salaried Employees can only take Deductions for Entertainment Allowance (or Deductions for Professional Tax). The Deductions mentioned above are not available for salaried staff.