The standard deduction is a flat amount automatically subtracted from your salary income before tax is calculated, available to every salaried employee and pensioner, with no bills, receipts, or proof required. In a tax system full of conditional deductions that depend on what you invest in or how much rent you pay, the standard deduction is refreshingly simple: you get it automatically, just for having salary or pension income.
The Current Amounts
Under the new tax regime, the standard deduction is ₹75,000 for FY 2025-26 (increased from ₹50,000 in an earlier budget). Under the old tax regime, the standard deduction remains ₹50,000. This gap, ₹25,000 more under the new regime, is one of several ways the new regime was made comparatively more attractive as the government has pushed adoption of the simplified structure.
Who Gets It
Every salaried employee and every pensioner receiving a pension that's taxed as salary income gets this deduction automatically, applied by your employer when calculating TDS, and reflected in your Form 16 without you needing to submit any declaration or proof. Self-employed individuals and those with only business or professional income (no salary component) don't get the standard deduction, since it's specifically tied to salary and pension income.
Why a Flat, No-Proof Deduction Matters
Every other major deduction, 80C, HRA, 80D health insurance, requires you to actually invest, spend, or hold a specific instrument to claim it, and often requires proof submitted to your employer or retained for scrutiny. The standard deduction requires none of this. It's the one guaranteed reduction in your taxable income regardless of your spending or investment choices, which is precisely why it's available even under the new regime that eliminated almost everything else.
How It Fits Into Your Overall Tax Calculation
The standard deduction is subtracted from your gross salary first, before any other applicable deductions (under the old regime) are applied. For example, under the new regime with a ₹12 lakh gross salary, your taxable salary income becomes ₹11.25 lakh after the ₹75,000 standard deduction, before applying the new regime's slab rates (and the Section 87A rebate, which for FY 2025-26 makes income up to ₹12 lakh effectively tax-free under the new regime, though this interacts with the standard deduction in specific ways worth checking with a calculator for your exact figures).
Does the Standard Deduction Change If You Have Multiple Employers?
You get one standard deduction for the year, not one per employer. If you switched jobs during the year, you'll need to declare your income from the previous employer to your current one (or reconcile it yourself when filing your ITR) to ensure the standard deduction and tax slabs are applied correctly across your combined salary income, rather than each employer independently applying a full standard deduction as if it were your only income for the year.
Standard Deduction vs Other Similar-Sounding Deductions
Don't confuse the standard deduction with professional tax (a separate, smaller deduction some states levy and which is also deductible from salary income) or with the various Chapter VI-A deductions like 80C and 80D, which require specific investments or expenses and are only available under the old regime. The standard deduction stands alone, automatic, and requires nothing from you beyond having salary or pension income.
Frequently Asked Questions
Do I need to submit any proof or investment to claim the standard deduction?
No, it's applied automatically to anyone with salary or pension income, with no supporting documents, investment, or expense required.
Is the standard deduction available to freelancers or business owners?
No, it applies specifically to salary and pension income. If you have both a salary and separate freelance or business income, you get the standard deduction against your salary portion only, not against the business income.
Why did the government increase the standard deduction specifically for the new regime and not the old one?
This was a deliberate move to make the new, simplified tax regime more attractive relative to the old regime, part of a broader push to encourage more taxpayers to adopt the new regime, which has lower slab rates but fewer deductions overall.
Does the standard deduction apply to pension received from an annuity purchased with your own money, like from NPS?
Pension income taxed as "salary" (which includes most pension from a former employer or annuity structured as regular income) generally qualifies for the standard deduction. The specific tax treatment can vary based on how the pension or annuity is structured, worth confirming with a tax professional if your situation is not a straightforward employer pension.
