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Budget 2018 REQUEST FOR RELIEF TO SALARY EARNERS: Relief to wages and salary earners - reintroduce standard deduction and allow depreciation to salary earners–will boost economy also

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Budget 2018 REQUEST FOR RELIEF TO SALARY EARNERS: Relief to wages and salary earners - reintroduce standard deduction and allow depreciation to salary earners–will boost economy also
October 10, 2017
  • Contents

Salary or wage earners:

Salary or wages earner also incur certain expenses in performance of his duties and many also use certain fixed assets for the purpose of carrying out functions and attending employment needs. It is desirable that certain deduction should be allowed for such expenses and also deprecation on assets used directly or indirectly in relation to employment.

Standard deduction:

Earlier a deduction under section 16 (i) of the I.T.Act, which was popularly called as standard deduction was allowed against salary income. However, same was phased out and from assessment year 2006-07 no such deduction is allowed. The deduction was to cover certain expenses incurred in performance of duties while earning salary, it was not necessary to prove actual expenditure. There was upper limit of deduction and therefore, there was a presumption about maximum expenses which one would have incurred as a wage earner. Though there is no justification for such limit because depending on post held, salary earned, status etc. expense vary from person to person.

It is desirable that standard deduction should be reintroduced and the same can be allowed as certain percentage of gross salary earned. Different slabs can be provided for such deduction.

Depreciation is allowed to employer so why not to salary earned

If an employer provide certain assets to employee, he is allowed deprecation allowance on such assets against business income or income from other sources. We find employers claiming depreciation allowance on vehicles, AC, TV, Refrigerator, water cleaners /coolers/ water purifiers, house hold furniture, electrical and house hold appliances, fitness and entertainment equipment’s etc. provided to employees at their residence and also at clubs for employees fitness and recreation etc.

Therefore, if the assets are owned and used by employee in performance of his duties, there is no justification to deny such deduction to him against his salary income.

Depreciation is allowed to professionals:

A person may work in capacity of an employee and / or a professional person. In both capacities the earning is mainly due to work done by the person. In case of professional there is also contribution by his teammates and his organization. In case of salary earner the team is provided by employer and some assets are provided by employer on which employer can claim depreciation. Some assets are owned by employee and used in pursuit of occupation of working as an employee.

 Depreciation on assets used by professionals for business and professional use of such assets is allowed. In case any asset is used partially for professional purposes and partially for personal use, then certain proportion of depreciation may be disallowed for personal use.

Wear and tear:

Assets owned and used by employees also suffer wear and tear and have to be cleaned, repaired, maintained, and replaced from time to time.

Examples of assets useful in better performance of duties:


Most of persons use vehicles for attending duties. Depending on income and status various types of vehicles are used. For example, many junior officers or employees use scooters, motor cycles or bi-cycles for attending duties as well as for saving time. Many senior officers uses cars for the same purpose. The mode and cost of such vehicles also vary according to salary and status of employees.

Information, entertainment and health devices:

TV, Radio, etc. are used to get information as well as entertainment. Information is required even in relation to employment. For good health entertainment  is also  required for personal needs as well as for occupational requirements. Health devices / fitment equipments/ air conditioners, refrigerator, etc. help in maintaining good health which is also very much necessary for better performance in employment. Therefore, such devices help in better performance of any person.

Time saving devices:

Washing machines, vacuum cleaners, dish washers, kitchen appliances help in saving time. By saving time one can get more time and energy to perform better in his / her employment. Therefore, these devices also help in better performance of duties of any one whether he work as an employee or as a professional.

With gradual increase of education and prosperity and lesser number of children of labor related working class of people, there is increasing difficulty in getting domestic help (servants, maids) and therefore, to save time and to have peace of mind, it is increasingly becoming necessary to use such appliances.


Building or flats owned and used for self residence or residence cum office of any salary earner is also helpful in providing physical comfort and security to such persons and his family. Buildings provided by an employer to his employees is eligible for deprecation allowance to employer. In case of rented premises, the employer get deduction for rent paid. The function and utility of such building is same whether it is provided by employer to employee or it is owned and used by employee himself.  Therefore, there is no justification for not allowing deprecation to salary earner who  own and use building in connection with his employment.

Rate of depreciation on assets used by salary earners:

As the assets will be used by the salary earner as well his family members, low rate of depreciation can be fixed. The rates can be say 50% of normal rates prescribed in the I.T.Rules.

Depreciation allowance shall boost demand of such assets:

Our economy is facing slow down and therefore this is high time to extend deprecation benefit on such assets. In case depreciation benefit is extended to salary earners, it will be very helpful in capital formation in hands of salary earners and it will also boost demand of such assets. It is desirable that announcement and amendment in this regard should be made urgently.


By: CA DEV KUMAR KOTHARI - October 10, 2017



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