Standard Deduction for Salaried Individuals in New & Old Tax Regime

The Income Tax Act not only provides provisions for imposing taxes on the income of citizens but also offers number of ways through which one can claim deductions and rebates. The deductions are allowed based on the way the taxpayers spend their income.

One such deduction offered to salaried individuals is the standard deduction. You must know that salaried individuals and pensioners can claim a certain amount under standard deduction by default without any investment or spending of money by the taxpayers. The provision was taken down for a number of years and was re-introduced during the Budget announcement in 2018.

Budget 2026 Expectations

It is expected that the standard deduction under the new tax regime might be increased to Rs. 1 lakh from Rs. 75,000 to increase the disposable income and ensure tax savings. 

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 2025-26 (AY 2026-27) 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.

Also Read:
1. Income Tax Slabs for FY 2025-26 (AY 2026-27)
2. Income Tax Slab For Women FY 2025-26
3. How To Save Taxes Under The New Regime FY 2025-26?
4. Exemption for ITR Filing for Senior Citizens