The standard deduction is one of the simplest tax benefits for salaried employees and pensioners in India. It requires no investment, no documentation, and no declaration to your employer-it is deducted automatically from your gross salary when computing taxable income.

How Much Is the Standard Deduction?

  • New Tax Regime (FY 2025-26 / AY 2026-27): \u20b975,000
  • Old Tax Regime: \u20b950,000

The new regime\u2019s higher standard deduction (\u20b975,000) was introduced in Budget 2024 to make it more attractive relative to the old regime.

Who Gets the Standard Deduction?

  • All salaried employees (government and private sector)
  • Pensioners (including family pensioners, subject to conditions)
  • Those who file under both old and new tax regimes

What Did Standard Deduction Replace?

Standard deduction was reintroduced in Budget 2018 as a replacement for the transport allowance (\u20b919,200/year) and medical reimbursement (\u20b915,000/year) exemptions that existed earlier. The current flat amount is far more generous.

Practical Impact

For someone in the 30% tax bracket, a \u20b975,000 standard deduction under the new regime saves \u20b922,500 in income tax (plus applicable surcharge and cess). Under the old regime, the \u20b950,000 standard deduction saves \u20b915,000 at 30%.

No Action Required

You do not need to submit any form or document to claim standard deduction. Your employer will apply it automatically when computing TDS from your salary.

Combine standard deduction with HRA, 80C, and NPS for maximum tax savings. Use the SaveTaxNow Calculator to see the full picture.