Budget: standard deduction in salary - 8000 cr loss -really?

Consolidation and IndAS Application

In todays budget, Mr. jaitely introduced Rs. 40,000 standard deduction as a relief to salaried class at a loss of 8000 crore loss to the government.

By allowing 40,000, following allowances withdrawn -

1. transport  - 19,200

2. Medical -  15,000

Total - 34,200

Net addl deduction - 5800

Tax @ 30% on this - 1740/-

Tax payers = 2 crore

Total -  Rs. 3,480 crore

Let us understand the actual loss to tax payers. Till now some companies used to allow transport reimbursement on actual expenses rather then transport allowance. On an average this amount was Rs. 7,000 p.m.

So, for year it was = 84,000

Plus, medical reimbursement  = 15,000

Total = 99,000

Net loss to tax payer - (99,000 - 40,00)*30% = 19,700 in other words net gain to goverment in the form of additional tax = 19,700 per person.

Please note, i have considered 7,000 reimbursement on the lowest side, some companies allows even 15,000 - 30,000 p.m as transport reimbursement.

So, instead of relief to salaried class, Mr. Jaitely has played a big game and now will take more tax.

salaried class is still thinking goverment has given a big relief! 


first half of ur calculation seems correct
but how come u are assuming to get deduction for transport allowance of 84,000/-?
Consolidation and IndAS Application

Its transport reimbursement which is allowed in lieu of transport allowance. This is assumed to be disallowed as per initial understanding of various experts.



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