In a respite to senior citizens, the Central Board of Direct Taxes (CBDT), on 5 April, issued a clarification stating that standard deduction is also available to taxpayers whose source of income is pension.
The benefit of standard deduction adds to the list of goodies that Budget 2018 had to offer to senior citizens.
Standard deduction
As per the amendment made through Finance Act 2018 in section 16 of the Income-tax Act, 1961, a person having income from salary can claim a deduction of up to Rs40,000 as standard deduction. CBDT stated in the clarification that pension received by a taxpayer from a former employer is taxable under the head “salaries”, so any person receiving pension shall be allowed a deduction of Rs40,000 for computing taxable income.
