In an visible attempt to put money into the pockets of the salaried class, finance Minister Pranab Mukherjee may bring back standard deduction on income tax rather than increasing income tax slabs when he presents the Budget. The provision of standard deduction, which was given to employees to compensate for the expenses incurred by them under heads such as conveyance, was discontinued by former finance minister P Chidambaram with effect from April 1, 2006.
The Budget would definitely bring relief to the salaried class though it would finally depend on the finance minister whether he would like tax slabs to be increased or restore standard deduction, both of which will help consumers.
In fact, a large section of the salaried class, including central government employees, supported the Congress despite BJP’s poll promise of exempting individuals with an annual income of up to Rs 3 lakh from income tax. In fact, standard deduction of 40% of employee’s salary or Rs 30,000, whichever was less, was allowed for those employees whose salary was Rs 5 lakh or less. For those with salary of more than Rs 5 lakh, a deduction of Rs 20,000 was allowed.
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