ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846
-A A +A

Abolition of Standard Deduction

The fringe benefits tax and the tax on cash withdrawals has attracted controversy, but it is the abolition of the category of 'Standard Deduction' in income tax law which is a faux pas. The finance minister is wrong to declare standard deduction, which is a mandatory deduction to arrive at the 'net taxable income' of the salaried class, as some kind of a 'personal allowance' which should be done away with. It is neither a 'personal allowance' nor an 'exemption'. And if it is a mandatory mechanism for computing the 'net taxable income' of the salaried class, can this be ever abolished as a category? It is indeed ironical that while P Chidambaram wants to dispense with standard deduction, treating it as a 'personal allowance', he has no problem in perpetuating exemptions for several allowances such as on transport, uniforms and for encouraging academic research and other professional pursuits.

Subscribers please login to access full text of the article.

New 3 Month Subscription
to Digital Archives at

826for India

$50for overseas users

Get instant access to the complete EPW archives

Subscribe now

Comments

(-) Hide

EPW looks forward to your comments. Please note that comments are moderated as per our comments policy. They may take some time to appear. A comment, if suitable, may be selected for publication in the Letters pages of EPW.

Back to Top