Standard deduction to benefit central govt employees

Central government employeers who benefited from the 7th Pay Commission will get further advantage  through standard deduction announcement today in the Budget.

It will help central government employees to save more money as the standard deduction of Rs 40,000 is introduced in lieu of transport and medical reimbursements for salaried employees. 

In his Budget speech, finance minister said the government will lose  Rs 8,000 crore revenue due to the standard deduction allowed to salaried employees. However, the transport allowance at enhanced rate shall continue to be available to differently-abled persons. Also, other medical reimbursement benefits in case of hospitalisation etc, for all employees shall continue.

“Standard deduction shall significantly benefit the pensioners too, who normally do not enjoy any allowance on account of transport and medical expenses."

For senior citizens, exemption of interest income on bank deposits has been raised to Rs 50,000 in the Budget 2018. 

Standard deduction was abolished in 2005. It had allowed a salaried employee to claim a flat deduction from salary income of Rs 30,000 or 40% of salary (if salary did not exceed Rs 5 Lakhs), or a deduction of Rs 20,000 (if salary exceeded Rs 5 lakh).

While the 7th Pay Commission raised the salaries of the central government employees, the standard deduction will benefit 2.5 crore salaried employees and pensioners.


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