Budget 2024: Evaluating the Standard Deduction for Salaried Taxpayers

Budget 2024
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Budget 2024, As the anticipation builds for Finance Minister Nirmala Sitharaman’s Interim Budget 2024, discussions within the financial sector are focusing on potential changes to the standard deduction—a key element for salaried taxpayers. Currently set at Rs 50,000, experts suggest that revisions are necessary to address the rising cost of living and the evolving nature of work.

1. Existing Standard Deduction and Its Evolution

Budget 2024, Introduced in 2018 at Rs 40,000 and subsequently increased to Rs 50,000 in the 2019 budget, the standard deduction has remained static. Tax Partner Surabhi Marwah from EY India advocates for a hike to Rs 1,00,000, citing the inflation index’s increase from 4% in September 2019 to 5.55% in November 2023.

2. Linking Standard Deduction to Income Levels

Chander Talreja, Partner at Vialto Partners, proposes a connection between the standard deduction and an individual’s salary. He suggests a percentage-based deduction (5% to 7%) aligned with basic expenses. Despite fiscal constraints, Talreja recommends a minimum increase of Rs 15,000, providing relief to individuals, especially under the new personal tax regime.

3. Adapting to Changing Work Models Post-Covid 19

Kuldip Kumar, Partner at Mainstay Tax Advisors, emphasizes the need for a standard deduction adjustment considering inflation and changes in work dynamics. With the rise of work-from-home arrangements post-Covid 19, Kumar suggests drawing inspiration from countries like Germany, where standard deductions for home-based work expenses are allowed.

4. International Perspectives on Standard Deduction

Chander Talreja provides insights into standard deduction limits and rules from major countries worldwide. The comparison includes France (10% of employment income), the USA (deduction of approximately Rs 11.5 lakhs), the UK (Standard Personal Allowance of approximately Rs 13 lakhs), Japan (minimum deduction of approximately Rs 3.3 lakhs), and Singapore (maximum exemption of approximately Rs 62,650).

5. Recommendations for Future Measures

Nitin Baijal, Executive Director at Deloitte India, suggests considering a standard deduction to cover subsistence expenses, mirroring the practice in EU countries. This approach aims to streamline processes, reduce paperwork, and enhance take-home pay for the salaried class. Baijal recommends revisiting the deduction quantum annually based on the cost of living index.

6. Standard Deduction FAQs

Addressing common queries, it is clarified that the standard deduction for the fiscal year 2023-24 remains Rs 50,000 for both the old and new income tax regimes. Additionally, standard deduction is allowed in the new tax regime, effective from the financial year 2023-24.


As discussions on Budget 2024 intensify, the potential revision of the standard deduction emerges as a crucial aspect to provide substantial relief to salaried taxpayers, aligning it with the evolving economic landscape and global practices.

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