Standard Deductions

Now ........ Only standard deduction upto Rs. 40,000/- deductible.

Transport allowance taxable.

it means we have to add back transport allowance of ₹ 11760 to total gross salary and then claim Standard Deduction of ₹ 40000 from gross total salary to find net taxable salary.

Correct ....

how standard dedution calculate

No formulae. Just deduct from taxable salary. Maximum deductible is 40K u/s. 16(ia) of IT act.

Standard deduction is a fixed amount of deduction – in this case, an amount of Rs 40,000 which can be reduced by salaried taxpayers, from their gross salary.

Interestingly, the provision of Standard Deduction was earlier available but was abolished in the Finance Act 2005. It is also proposed that this deduction would replace the existing transport allowance of Rs 1600 per month (i.e.,19200 p.a.) and medical allowance of Rs 15,000 per annum.

so here in the present case irrespective of actual amount spent(i.e.,11760) you need to reduce 40000 straight away....