The standard deduction is a fixed amount that taxpayers can subtract from their gross income to reduce their taxable income. It is available to salaried individuals and pensioners without requiring proof or documentation.
The Income Tax Act provides provisions for taxing citizens’ income and includes various deductions and rebates based on income usage. One notable deduction for salaried individuals is the standard deduction, which was reintroduced during the Budget announcement in 2018. This allows salaried individuals and pensioners to claim a specific amount without needing to invest or spend money.
Standard Deduction for Salaried Individuals • Meaning: The standard deduction enables eligible taxpayers to reduce their taxable income by a fixed amount, reducing their tax liability. It primarily applies
to salaried individuals and pensioners. • Amount of Standard Deduction: The standard deduction allowed under both regimes is as follows:
- Old Tax Regime: Rs. 50,000
- New Tax Regime: Rs. 75,000
What is Standard Deduction?
The standard deduction is a fixed amount that taxpayers can subtract from their gross income to reduce their taxable income. It is available to salaried individuals and pensioners without requiring proof or documentation.
Standard Deduction under New & Old Tax Regime
The standard deduction available for salaried individuals under both the regimes for the FY 2024-25 (AY 2025-26) is as follows:
- Old Tax Regime: Rs. 50,000
- New Tax Regime: Rs. 75,000
Purpose of Standard Deduction
The introduction of standard deduction aims to achieve the following:
- Simplify tax filing by reducing paperwork and enabling deductions regardless of actual expenses.
- Offer tax relief specifically to middle-class salaried individuals.
- Extend benefits to pensioners through the standard deduction.
Benefits of Standard Deduction
The standard deduction is a fixed amount available to salaried individuals, directly reducing taxable income and, in turn, lowering their tax liability and overall tax burden.
- Reduction of tax liability: The standard deduction is a flat deduction that helps in reducing the taxable income, resulting in reduction of tax liability.
- Simplification of ITR filing: There is no need to maintain any documents or proofs to claim standard deduction making it easier to file the income tax return while claiming standard deduction.
- No Conditions Attached: The standard deduction is available to all salaried individuals, without any conditions.
Documents Required for Standard Deduction
No supporting documents are required to claim the standard deduction for salary income. However, for filing income tax returns, you will need to provide the following documents and complete the necessary forms:
- Bank statements for the relevant financial year.
- Income statements from interest or fixed deposits.
- TDS (Tax Deducted at Source) certificates.
- Investment documents.
- Form 26AS and Form AIS.
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INCOME TAX CALCULATOR FOR A.Y. 2025-26 (F.Y. 2024-25) (FOR RESIDENT INDIVIDUAL AGE BELOW 60 YEARS AND HAVING INCOME UP TO RS.50 LAKH AND WHICH WAS TAXABLE AS PER NORMAL SLAB RATES).
Enter Actual Amount of Income and Deductions in black highlighted cells and it gives you Calculation of Tax Amount as per Old Regime and New Regime and also indicate which regime is beneficial for you
Some Unique Features of this Tax Calculator for FY 2024-25
- It provides Calculation of Tax (slab rate wise tax on income)
- It considers the effect of Standard Deduction for Salary Income (Rs.50,000 for old regime and Rs.75,000 for new regime)
- It considers effects of marginal relief for new tax regime
- It provides difference between tax amount under both regime and also indicates which regime is beneficial
https://drive.google.com/file/d/1jC7kKGFC88uRahXWk32dTNacs46X2vo0/view
Download the excel file from above link and enter the amounts in black highlighted cells
Taxation Updates (CA Mayur J Sondagar)
Frequently Asked Questions
Can I claim a deduction of 50,000 for income tax returns filed prior to 2019- 20 as well?
No, you cannot claim a deduction of Rs. 50,000 for the years prior to 2019-20 as the limit then was Rs 40,000.
Can I claim transport allowance and medical allowance as well, along with the standard deduction?
No, you can claim only the standard deduction and not the transport and medical allowance.
I have income from freelancing. Can I claim the standard deduction?
No, Standard deduction is applicable only for individuals having income from Salary. Since Freelancing is considered as income from business and profession same is not eligible for the standard deduction.
Who can claim standard deduction?
Only those individuals having income from Salary can claim the standard deduction.
Is standard deduction available in new tax regime?
Yes , standard deduction is available under the new regime as well.
What is the standard deduction for FY 2024-25?
The standard deduction for FY 2024-25 is Rs. 50,000 under the old regime and Rs. 75,000 under the new regime.
Is Standard Deduction increased in Budget 2024?
Yes, Standard Deduction has been increased from Rs.50,000 to Rs.75,000 only for tax payers opting for new tax regime. This increase is applicable from FY 2024-25.
What is the standard deduction in new tax regime for 2024-25?
Union budget 2024 has proposed an increase in the standard deduction under thenew tax regime for the FY 2024-25 to Rs. 75,000.
Is standard deduction 75,000 applicable in old tax regime?
An increased standard deduction of Rs. 75,000 is not applicable under the Old tax regime. However standard deduction of Rs. 75,000 is applicable under the new tax regime for the FY 2024-25.
How is Standard Deduction Availed in the Case of Multiple Employers?
The standard deduction is available as a flat deduction from the total salary earned by the employee in a particular financial year. It does not depend on the number of jobs changed by the employee. Hence one flat deduction is available for the cumulative salary earned from all the employers.
Is Standard deduction available for pensioners?
Yes, in a clarification issued by the Income tax department, if a taxpayer has received a pension from the former employer, it is taxable under the head ‘Income from Salaries’.
Therefore, the taxpayer can claim a standard deduction of Rs. 50,000/Rs. 75,000 or the amount of pension, whichever is less.