Experts have said that the standard deduction limit for salaried middle class taxpayers may be increased in the upcoming Union Budget in view of the coronavirus pandemic.
The Federation of Indian Chambers of Commerce & Industry (FICCI) was quoted as saying in a Livemint report that the standard deduction for salaried employees should be increased to Rs 1 lakh. Citing the expenses incurred by employees in setting up home offices, FICCI said that the Centre should consider such a raise in the limit. The Confederation of Indian Industry (CII) has also said that the limit of standard deduction should be hiked substantially due to rising inflation.
The report quoted Aditya Chopra, Managing Partner of Victoriam Legalis, as saying that the for taxpayers awaiting a pleasant surprise at a time when the economy is battered by the pandemic, the announcement could be a "'rabbit in the hat' moment". Another expert, co-founder of MoneyTrap Kunal Varma opined that the tax relief would be welcome as people's incomes have taken a hit over the past year and also in view of inflation. The move would boost spending and the ability to invest, he said.
Standard deduction refers to a fixed cut in income tax that is allowed to specific payers irrespective of their expenses and investments. The provision was introduced in the 2018-19 budget to replace transport and medical allowance.