- Standard Deduction of Rs 1 lakh might be re-introduced
- The deduction was abolished with effect from A.Y. 2006-07
- The move is seen to give parity to salary earners w.r.t. business persons
Chambers of commerce have suggested reintroduction of the standard deduction for salaried employees of at least Rs 1 lakh.
Tax experts say that reintroduction of standard deduction will help salaried employees get some parity with respect to businessmen and other self-employed professionals, who can claim a number of expenses such as rent, staff expenses and driver's salary etc. as business expenditure and reduce tax burden.
"Salaried employees don't enjoy the degree of parity like businessmen, professionals or people having income from other sources like rentals, interest etc. so as to claim any expense related to their employment - be it expenditure for skill development. The salaried class enjoyed the benefit of standard deduction till AY 2005-06, before its withdrawal later; hence it should be restored to bring parity," said Sandeep Sehgal, director of tax and regulatory at Ashok Maheshwary & Associates LLP.
"There are various expenses that an employee incurs during the course of his or her employment for which no deduction is available. As per return filing statistics, the maximum number of returns has been filed in Form ITR 1, which is generally used by salaried persons and pensioners to file their annual return of income. Salaried employees are always considered as one of the main contributors towards direct taxes. The government should allow some additional benefits to the salaried employees by reintroducing the standard deductions type of provisions," says Naveen Wadhwa, DGM of Taxmann.