New STANDARD DEDUCTION Eligibility FY 2018-19 | Are You Eligible to Save Income Tax? | FinCalC [VIDEO]

In Budget 2018, there were few changes made in the way the Income Tax will be calculated for FY 2018-19. New Standard Deduction was introduced in Budget 2018.

A maximum of Rs.40,000 will be allowed to be deducted before Calculating the Income Tax. But this Standard Deduction is allowed only for Employees and Pensioners.

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What is Added?

In Budget 2018, this Standard Deduction of Rs.40,000 was one of the changes that was made.

So your Taxable Income will be:

Taxable Income = Total Income - Rs.40,000 - Investment made

This Standard Deduction is only applicable to Employees and Pensioners. So if you are an Employee and working in an organization, your Form 16 would include this new Standard Deduction while you are filing your ITR (Income Tax Returns)

If you are a Pensioner, make sure that you claim this Deduction while calculating your Income Tax for FY 2018-19.

What is Removed?

Previously, Transport Allowance of Rs.19,200 was allowed before Calculating your Income Tax. This is removed in FY 2018-19 due to introduction of Standard Deduction.

Another change was, Medical Reimbursement of Rs.15,000 was allowed to be deducted. This deduction is also removed due to the introduction of Standard Deduction.

This way, an individual used to get Rs.34,200 before FY 2018-19 for Transport Allowance (Rs.19,200) and Medical Reimbursement (Rs.15,000). From now on, in place of Transport Allowance and Medical Reimbursement, Standard Deduction of Rs.40,000 will be allowed to Calculate the Income Tax.

In FY 2018-19 you'll get an additional benefit of extra Rs.5,800 (Rs.40,000 - Rs.34,200) compared to calculation of Income Tax in previous Financial Years.

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