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All-in-one HR platform · v2.0
14-day free trial · No credit cardhello@HrMagix.com
All-in-one HR platform · v2.0
14-day free trial · No credit cardhello@HrMagix.com
A flat deduction from salary income under Section 16(ia) of the Income-tax Act, allowed without any proof of expense. It applies under both the old and new regimes, but the amount has differed between them and is set by the Finance Act, so payroll should take the current year's figure rather than carry one forward.
In payroll the standard deduction is a single setting applied in the annual tax projection, not a monthly line on the payslip. It reduces projected taxable salary for every employee and so lowers the TDS spread across the months.
The yearly task is to confirm the amount for each regime after the Union Budget and the Finance Act, update the payroll tax settings before the April run, and then check one employee under each regime by hand. A setting carried over from the previous year is the usual reason a whole company's TDS is slightly wrong.
Joiners need attention too. When an employee changes jobs mid-year, the deduction is allowed once for the year, so if the previous employer has already given it in their computation, the new payroll should apply it in the combined projection only once. Note the treatment in the joiner's tax file so Form 16 matches.
No. It is a flat deduction from salary income allowed without any bills or declarations. Payroll applies it automatically when computing TDS.
It is currently allowed under both the old and new regimes, though the amount can differ. The Finance Act sets the amount each year, so check the current figure.
Yes, pension received from a former employer is taxed as salary, so the standard deduction applies to it as well.
No. It is one deduction per year regardless of the number of employers. When an employee joins mid-year, payroll should account for it being claimed by the previous employer.
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