It has been introduced to bring parity between salaried employees and self-employed individuals. While self-employed individuals can claim various business-related expenses as deductions that bring down their taxable income, no such benefit could be claimed by most salaried individuals. It is a flat deduction of INR 50,000/- from AY 2020-21 to your “Income taxable under the head salaries”.
Steps to navigate to standard deduction
- Navigate to Incomes
- Go to Salary and add income OR if it is already added, you can click on Salary and go to Salary Details to see the detailed breakdown
You might note that the Standard Deduction field is greyed out with the amount reflecting as zero under Salary Income.
The field is not editable however Standard Deduction is auto-applied on Salary income under the Old Tax Regime. Once you click on save for your Salary Income, you will see the standard deduction amount applied and Salary Income reduced by the amount.Note: Standard deduction amount is not applicable under the New Tax Regime