Standard deduction for salaried Indians - the simplest tax break
Standard deduction is a flat amount that the Income Tax Department lets salaried taxpayers and pensioners reduce from their gross salary before computing taxable income. You do not have to invest anything, submit receipts, or file paperwork - it is applied automatically.
By Aditi Menon·Editor-in-Chief·reviewed by editor
Last updated: 15 June 2025
What the standard deduction actually is
The standard deduction was reintroduced for salaried taxpayers in FY 2018-19 at Rs 40,000, in place of the earlier transport allowance (Rs 19,200) and medical reimbursement (Rs 15,000). It was raised to Rs 50,000 from FY 2019-20 (old regime), and later extended to Rs 50,000 in the new regime from FY 2023-24, then raised to Rs 75,000 in the new regime from FY 2024-25 (retained for FY 2025-26 under Union Budget 2025).
Who gets the standard deduction
- Salaried employees - full-time payroll job with a valid Form 16.
- Pensioners - both government and private-sector pensioners.
- Family pensioners - a smaller Rs 15,000 / one-third-of-pension deduction under section 57(iia); different from the salaried standard deduction.
- Freelancers, consultants, and business owners - NOT eligible. They deduct actual business expenses under section 37 instead.
How the deduction is applied - illustration
The standard deduction is applied first, before any other deductions or the tax slabs. It is entirely automatic - the employer applies it in your monthly TDS calculation, and the e-filing portal applies it when you file ITR.
| Item | New regime (FY 25-26) | Old regime (FY 25-26) |
|---|---|---|
| Gross annual salary | Rs 15,00,000 | Rs 15,00,000 |
| Standard deduction | (Rs 75,000) | (Rs 50,000) |
| Other deductions (80C etc.) | Not applicable | (Rs 1,50,000) |
| Taxable salary | Rs 14,25,000 | Rs 13,00,000 |
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What if I switched jobs during the year?
The standard deduction is per PERSON per financial year, not per employer. If you had two employers during the same year, you still get one Rs 75,000 deduction. Employer 1 may have applied it in your TDS; Employer 2 may have applied it separately. At ITR time you consolidate salary from both, but claim the deduction only once - any excess TDS is refunded.
Frequently Asked Questions
Sources & references
- Union Budget 2025 - retained standard deduction — Ministry of Finance, GoI
- Income Tax Act - Section 16(ia) — CBDT
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