The standard deduction for salaried taxpayers was reestablished at Rs.40,000 from FY2018-19 onwards, instead of the withdrawal of tax benefits for transportation allowance of Rs.19,200 and medical reimbursement of Rs.15,000, which were eliminated in financial year (FY) 2005-06.
Given the annual cost of inflation throughout the years and the current living expenses of paid workers, the amount of the deduction is relatively low. Since the beginning of the Covid-19 epidemic, household spending has been negatively affected by rising medical costs and work-from-home expenses such as furniture, power, and the Internet. As a result, the present standard deduction maximum of Rs.50,000 should be increased to at least Rs.75,000.
Furthermore, many nations, including the United States, the United Kingdom, Canada, and Ireland, have implemented tax breaks for Covid-19-related medical expenses as well as work-from-home expenses, such as home office setup. In India, however, no similar deduction or exemption has yet been applied. As a result, raising the standard deduction limit would give individuals more financial flexibility in incurring the aforementioned expenses.
