Standard Deduction U/s 16(ia) | With Automated Income Tax Form 16 Preparation Excel Based Software for the F.Y.2021-22

 Standard Deduction U/s 16(ia) | Section 16 of the Income Tax Act 1961 provides for a

 deduction from income charged to tax under the heading “salaries”. Provides deductions for

 the standard deduction, leisure allowance, and occupational tax. Through this deduction, a

 salaried taxpayer can reduce his or her taxable salary income.

 

Moreover, with recent modifications to the standard deduction, the interest of this section has been extended to a higher amount. Moreover, there is no hassle in submitting bills for travel and medical treatment which makes it easy to claim them.

Download and Preparation One by One Form 16 Part A&B and Part B for the Financial Year 2021-22

In this article, we'll cover each of the deductions in Section 16 along with account-specific illustrations.

 

U/s  16 (IA) Salary Deduction of Rs. 50,000/-

The standard deduction is allowed under Section 16(ia) of the Income Tax Act. Replace the standard deduction for transportation allowance of Rs 19,200 and medical reimbursement for Rs 15,000. In Budget - Presented by Finance Minister Jaitley for 2018.

 

Budget - 2018 provided for a standard deduction of Rs 40,000 in lieu of transport allowance and medical reimbursement. This deduction of Rs 40,000 does not require the taxpayer to provide any invoice or proof of expenses. It provides for a fixed discount of Rs 40,000.

Download and Preparation One by One Form 16 Part B for the Financial Year 2021-22

 

Later in the 2019 Provisional Budget, the discount amount of Rs 40,000 was increased to Rs 50,000. Hence, the discount for F.Y 2018-2019 was Rs 40,000 and from FY 2019-20 the discount would be Rs 50,000.

 

The standard discount is also available for retirees. A clarification has been issued by the Central Bank of Tunisiaexplaining the applicability of the standard deduction to retirees. The pension received by the taxpayer from his previous employer is subject to tax underthe heading “salaries”. Since the pension received is taxable under "salaries," the deduction will also be available to pensioners under Section 16.

 

The deduction amount available under Section 16 for the standard deduction is:

Salary received

Or

50,000 rupees

Whichever is less?

Download and Preparation at a time 50 Employees Form 16 Part B for the Financial Year 2021-22

 

Details F.Y2018-19 F.Y2019-20

(Rs.) From F.Y2019-20 From F.Y2020-21 (Rs.)

Base salary + design allowance 800,000 800,000

Other taxable benefits 100,000 100,000

Gross wages 900,000

Standard deduction 40000

Total income 860,000

Other deductions 200000

Taxable income 660000

Income tax 44500

Income Tax Savings - 2000

Remember that the standard deduction is not related to the u/s 80C deduction or any other part of the VIA chapter.

 

Interpretation of the Standard Deduction Calculation

Section 16(ii) Entertainment allowance

Entertainment allowance is first included in wage income and then deducted based on several criteria. The allowance must be an allowance specifically provided by the employer to the taxpayer as an entertainment allowance.

Entertainment allowance for government employees

The minimum deduction for central government and state employees is:

20% of the basic salary

5000 rupees

Amount Provided as Entertainment Allowance in Fiscal Year

Download and Preparation at a time 50 Employees Form 16 Part A&B for the Financial Year 2021-22

 

To qualify for relief, the taxpayer must ensure that the following details are met:

Salary must not include any allowances, employer benefits, or other benefits received. Essentially, wages should be the gross amount received, excluding any other benefits.

 

Ignore the actual amount spent on entertainment benefits received from the employer.

 

Entertainment allowance for a non-government employee

The hospitality deduction is not available to non-government employees. Only employees of the central or state government are eligible for the deduction. In addition, employees of local governments and public corporations are not entitled to the deduction.

 

Demonstration of calculating the entertainment allowance deduction

 

Size Details

Salary (excluding other allowances, benefits and privileges) 120000

Entertainment allowance received per month 1000

Entertainment allowance for the full fiscal year 12,000

Available withdrawal amount:

20% of salary (а) 24000

5000 rupees (b) 5000

The actual amount received (c) 12000

The amount allowed as a deduction (minimum a, b and c) is 5000

Download and Preparation at a time 100 Employees Form 16 Part B for the Financial Year 2021-22

 

Occupational or employment tax under Section 16(iii)

A deduction is allowed for payroll tax under section 16iii of the Income Tax Act. The amount paid by the taxpayer in respect of work tax or occupational tax is allowed as a deduction in accordance with section 16. Here, work tax is provided for in (2) of section 276 of the Constitution.

 

When calculating professional tax deductions, the following points should be considered:

 

The taxpayer must claim the deduction only in the fiscal year in which the professional tax is paid to the government.

 

Tax paid by an employer on behalf of an employee is also eligible for a deduction. Here, the amount paid by the employer as an occupational tax will be included in the first place as a mandatory condition in the total salary. Later, an equal amount will be allowed as a deduction under section 16.

 

 Under section 16 of the Income Tax Law, there is no upper or lower deduction limit.  However, no state government may charge more than 2500 rupees per year as professional tax. Only tax paid is deductible, not interest on late payment or fees for late or non-payment of professional tax.

 

Download and Preparation at a time 100 Employees Form 16 Part A&B for the Financial Year 2021-22

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Standard deduction U/s 16(ia) | With Automatic Income Tax Preparation Software in Excel (All in One for the Govt & Non-Govt employees F.Y.2021-22) + (Automatic Income Tax Master of Form 16 Part B for F.Y.2021-22

 Standard deduction U/s 16(ia) | Calculating taxable income for an individual involves calculating gross

 income. Gross income is the total income under various heads of income. You can reduce your gross

 income by taking various deductions and allowances to get the final taxable income. These deductions

 can be deducted under sections 80C, 80D or standard income deduction from your salary or

 homeownership. Net income after this deduction is subject to tax at the respective flat rate applicable

 to the taxpayer. 

The standard wage deduction was first introduced in 1974. But the government abolished it in 2005. The government reintroduced it into the 2018 Union budget. After its reintroduction, the government introduced several employee benefits. These include an increase in the standard deduction benefit for the financial year 2021-22. Before discussing the benefits, let's understand what the standard deduction is.

Download & Prepared at a time 100 Employees Automated Income Tax Form 16 Part B for the Financial Year 2021-22 as per new and old tax regime

What do you mean by standard deduction?

 

There have been many changes in the standard deduction in Indiaunder the income tax of India. Starting in the financial year 2019-20, a salaried person can again claim the standard deduction on her income. This deduction is regardless of whether it has an expense or an investment. The government has extended the benefit of the standard deduction through the financial year 2021-22.

 

Previously, employees could claim travel and medical expenses only after submitting proof. But for the standard deduction, it is not necessary to present proof of expenses. Not only employees, but employers are also at an advantage as they no longer have to process their bills.

 

Now, there are two types of standard deductions available in India. One is on the homeownership income header while the other is on the salary income header.

Download & Prepared at a time 50 Employees Automated Income Tax Form 16 Part B for the Financial Year 2021-22 as per new and old tax regime

 

When a person receives rental income from homeownership, they are included in the income from homeownership. The standard deduction for the 2020-21 valuation year under Real Estate Income is 30%.

 

However, the standard deduction under the payroll is a default deduction. We subtract this from the individual's wage income to reduce the taxable amount. Only a salaried person or a person applying for a pension can benefit from it.

 

Each employee can request the benefit of the ordinary deduction for the financial year 2021-22. The move provides significant tax breaks for employees. Let's try to understand in detail how the standard deduction in section 16 (IA) benefits the employee.

 

Standard Deduction in Salary Income

Net salary is the total sum of salary, pension, tip, compensation, commission minus any deductions under section 10 of the Income Tax Act. Section 10 covers allowances such as renting a house and transportation.

Download & Prepared at a time 100 Employees Automated Income Tax Form 16 Part A&B for the Financial Year 2021-22 as per new and old tax regime

 

The government reintroduced the standard deduction from the 2019-20 valuation year. Previously, the government waived the transportation allowance of Rs 19,200 and the medical allowance of Rs 15,000. Salaried individuals can deduct a fixed amount of Rs 40,000 in the 2019-20 valuation years. But they could no longer deduct transportation and medical allowance.

 

From AY 2020-21, a standard deduction of Rs 50,000 is available for all salaried individuals. Any medical and travel allowances are not yet applicable.

 

Please note that the flat-rate deduction for salary cannot, in any case, exceed the amount of the salary. In other words, the maximum amount of deduction you can get under section 16 is Rs 50,000 or less for the salary amount.

Download Automated Income Tax Preparation Excel Based Software All in One for the Government & Non-Government (Private) Employees for the F.Y.2021-22 and A.Y.2022-23 

Feature of this Excel Utility:-

 

1) This Excel utility prepares and calculates your income tax as per the New Section 115 BAC (New and Old Tax Regime)

 

2) This Excel Utility has an option where you can choose your option as New or Old Tax Regime

 

3) This Excel Utility has a unique Salary Structure for Government and Non-Government Employee’s Salary Structure.

 

4) Automated Income Tax Arrears Relief Calculator U/s 89(1) with Form 10E from the F.Y.2000-01 to F.Y.2021-22 (Update Version)

 

5) Automated Income Tax Revised Form 16 Part A&B for the F.Y.2021-22

 

6) Automated Income Tax Revised Form 16 Part B for the F.Y.2021-22

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What is the Standard Deduction? With Automated Income Tax Preparation Software All in One for the Non-Govt(Private) Employees for the F.Y.2021-22 as per Budget 2021

 

What is the Standard Deduction? Budget 2018: Standard discounts come back after 13 years 

Effective from 1st April 2018, Rs 40,000 (or the amount of salary, whichever is less),[Now this deduction raised Rs.50,000/- from the F.Y.2018-19 Budget,]  is sanctioned from salary income. However, a transport allowance of Rs 19,200 and a medical reversal of Rs 15,000 has also been omitted. Thus, on a net basis, an additional rebate of Rs 5,800 is applicable for a person receiving "income from salary". 

What is a standard discount?

The standard deduction is basically a flat amount of deduction from salary income before calculating taxable income. No proof is required to claim a standard discount. Conceptually, the standard exemption speaks to taking care of expenses that are not allowed as deductions under income tax rules.

Standard discount facility

 

Simplicity is the maximum benefit of the standard deduction. It is approved as a direct discount from salary income. There is no need to submit any bill or proof to claim the standard discount.

Download and prepared at a time 50 Employees Automated Income Tax Form 16 Part A&B in Excel for the F.Y.2020-21

Standard discount on pension income

Standard Exemption of Rs. 50,000 / - for a person receiving pension income from a former employer In such cases, pension income is taxed under the heading "Income from salary" and a standard exemption of Rs.50,000/-

 

However, income from insurance companies or from the nature of income under the National Pension Scheme (NPS) will not be eligible for a standard discount because such income is not of a salary nature. This national anniversary will be taxed under the heading "Income from other sources".

 

History of standard discounts in India

 

The standard exemption for salaried taxpayers was introduced in 1974. However, it was discontinued from the 2006-07 assessment year. The reason Finance Minister Chidambaram stopped cutting standard concessions was that the general concession limit was raised, and the income slabs were being widened. This argument, however, was false, given that the benefits of higher general discounts and income tax slabs were available for all assessments regardless of the nature of income, not only for the salaried person but also for the person earning from business or other sources.

Download and prepared at a time 50 Employees Automated Income Tax Form 16 Part B in Excel for the F.Y.2020-21

 

Prior to its closure, the standard discount was Rs 30,000 or 40% of salary (if the salary does not exceed Rs 5 lakh) in the financial year 2006-07; Or a discount of Rs. 20,000 (if the salary is more than Rs. 5 lakhs).

 

Total vs. Net Income Debate

 

A trader will deduct all expenses related to the business and pay tax only on net profit (and not on gross profit). Similarly, when you sell a capital asset, gross receipts are not taxed, but the cost of acquiring the asset and the sales cost from the gross receipt is deducted. With the same argument in mind, the amount of income from the home property is not on the total rental income, after the deduction of municipal tax and after the standard discount of 30% of the net annual value. 

There are exceptions to the rule. And one wrong!

In a limited way, income from salary is taxed on a gross basis. Exemption from all legitimate expenses incurred by a person for earning salary income is not allowed. Some allowances like a certain portion of salary, i.e. house rent allowance, travel allowance, etc. are considered tax free. There is a limit to the amount of this allowance, which is considered duty free, and any amount received in excess of this limit is taxable. It should be noted that the employee may actually incur expenses on house rent or travel which is considered tax-free, but still, salary expenses are not reduced by the amount of the entire expenses, but only the limit applicable to this allowance.

Download and prepared at a time 100 Employees Automated Income Tax Form 16 Part B in Excel for the F.Y.2020-21

 

Expenditure on deduction from salary is not considered as a direct reason for earning that income. For example, expenses on travel and transportation is directly responsible for salary income and thus should be allowed to be discounted without any restrictions (transportation allowance was approved earlier but not consistent with most expenses). Similarly, any expenditure incurred in acquiring new knowledge or skills, as a result of which the person is able to maintain or increase the salary income should be discounted as a result.

 

Such expenditures approved under the Income Tax Rules are to be considered standard exemptions. Thus the re-introduction of the standard discount removes taxability on a net basis from the total base on the basis of limitations under the tax value. Ideally, the standard discount amount should be set as a percentage of salary income rather than the same amount for everyone. 

Download Automated IncomeTax Preparation Excel Based Software All in One for the Non-Government (Private) Employees for the Financial Year 2021-22 and Assessment Year 2022-23U/s 115BAC

 

Feature of this Excel Utility:-

 

1) This Excel Utility Prepare Your Income Tax as per your option U/s 115BAC perfectly.

 

2) This Excel Utility has all amended Income Tax Section as per Budget 2021

 

3) Automated Income Tax Form 12 BA

 

4) Automated Calculation Income Tax House Rent Exemption U/s 10(13A)

 

5) Individual Salary Structure as per the Non-Govt(Private) Concern’s Salary Pattern

 

6) Individual Salary Sheet

 

7) Individual Tax Computed Sheet

 

8) Automated Income Tax Revised Form 16 Part A&B for the F.Y.2021-22

 

9) Automated Income Tax Revised Form 16 Part B for the F.Y.2021-22

 

10) Automatic Convert the amount into the in-words without any Excel Formula

Read More

What is the Standard Deduction? With Automated Income Tax Preparation Software All in One for the Non-Govt(Private) Employees for the F.Y.2021-22 as per Budget 2021

 

What is the Standard Deduction? Budget 2018: Standard discounts come back after 13 years 

Effective from 1st April 2018, Rs 40,000 (or the amount of salary, whichever is less),[Now this deduction raised Rs.50,000/- from the F.Y.2018-19 Budget,]  is sanctioned from salary income. However, a transport allowance of Rs 19,200 and a medical reversal of Rs 15,000 has also been omitted. Thus, on a net basis, an additional rebate of Rs 5,800 is applicable for a person receiving "income from salary". 

What is a standard discount?

The standard deduction is basically a flat amount of deduction from salary income before calculating taxable income. No proof is required to claim a standard discount. Conceptually, the standard exemption speaks to taking care of expenses that are not allowed as deductions under income tax rules.

Standard discount facility

 

Simplicity is the maximum benefit of the standard deduction. It is approved as a direct discount from salary income. There is no need to submit any bill or proof to claim the standard discount.

Download and prepared at a time 50 Employees Automated Income Tax Form 16 Part A&B in Excel for the F.Y.2020-21

Standard discount on pension income

Standard Exemption of Rs. 50,000 / - for a person receiving pension income from a former employer In such cases, pension income is taxed under the heading "Income from salary" and a standard exemption of Rs.50,000/-

 

However, income from insurance companies or from the nature of income under the National Pension Scheme (NPS) will not be eligible for a standard discount because such income is not of a salary nature. This national anniversary will be taxed under the heading "Income from other sources".

 

History of standard discounts in India

 

The standard exemption for salaried taxpayers was introduced in 1974. However, it was discontinued from the 2006-07 assessment year. The reason Finance Minister Chidambaram stopped cutting standard concessions was that the general concession limit was raised, and the income slabs were being widened. This argument, however, was false, given that the benefits of higher general discounts and income tax slabs were available for all assessments regardless of the nature of income, not only for the salaried person but also for the person earning from business or other sources.

Download and prepared at a time 50 Employees Automated Income Tax Form 16 Part B in Excel for the F.Y.2020-21

 

Prior to its closure, the standard discount was Rs 30,000 or 40% of salary (if the salary does not exceed Rs 5 lakh) in the financial year 2006-07; Or a discount of Rs. 20,000 (if the salary is more than Rs. 5 lakhs).

 

Total vs. Net Income Debate

 

A trader will deduct all expenses related to the business and pay tax only on net profit (and not on gross profit). Similarly, when you sell a capital asset, gross receipts are not taxed, but the cost of acquiring the asset and the sales cost from the gross receipt is deducted. With the same argument in mind, the amount of income from the home property is not on the total rental income, after the deduction of municipal tax and after the standard discount of 30% of the net annual value. 

There are exceptions to the rule. And one wrong!

In a limited way, income from salary is taxed on a gross basis. Exemption from all legitimate expenses incurred by a person for earning salary income is not allowed. Some allowances like a certain portion of salary, i.e. house rent allowance, travel allowance, etc. are considered tax free. There is a limit to the amount of this allowance, which is considered duty free, and any amount received in excess of this limit is taxable. It should be noted that the employee may actually incur expenses on house rent or travel which is considered tax-free, but still, salary expenses are not reduced by the amount of the entire expenses, but only the limit applicable to this allowance.

Download and prepared at a time 100 Employees Automated Income Tax Form 16 Part B in Excel for the F.Y.2020-21

 

Expenditure on deduction from salary is not considered as a direct reason for earning that income. For example, expenses on travel and transportation is directly responsible for salary income and thus should be allowed to be discounted without any restrictions (transportation allowance was approved earlier but not consistent with most expenses). Similarly, any expenditure incurred in acquiring new knowledge or skills, as a result of which the person is able to maintain or increase the salary income should be discounted as a result.

 

Such expenditures approved under the Income Tax Rules are to be considered standard exemptions. Thus the re-introduction of the standard discount removes tax-ability on a net basis from the total base on the basis of limitations under the tax value. Ideally, the standard discount amount should be set as a percentage of salary income rather than the same amount for everyone. 

Download Automated IncomeTax Preparation Excel Based Software All in One for the Non-Government (Private) Employees for the Financial Year 2021-22 and Assessment Year 2022-23U/s 115BAC

 

Feature of this Excel Utility:-

 

1) This Excel Utility Prepare Your Income Tax as per your option U/s 115BAC perfectly.

 

2) This Excel Utility has all amended Income Tax Section as per Budget 2021

 

3) Automated Income Tax Form 12 BA

 

4) Automated Calculation Income Tax House Rent Exemption U/s 10(13A)

 

5) Individual Salary Structure as per the Non-Govt(Private) Concern’s Salary Pattern

 

6) Individual Salary Sheet

 

7) Individual Tax Computed Sheet

 

8) Automated Income Tax Revised Form 16 Part A&B for the F.Y.2021-22

 

9) Automated Income Tax Revised Form 16 Part B for the F.Y.2021-22

 

10) Automatic Convert the amount into the in-words without any Excel Formula

 

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