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The 2-Minute Summary
Standard deduction is the simplest tax benefit for salaried people in India. You do not have to invest anything. You do not have to submit a single receipt. It is a flat deduction from your salary income that reduces your taxable income automatically, every year. Under the Income Tax Act 2025, the standard deduction is governed by Entry 2 of the deduction table under Section 19(1). The amount depends on which tax regime you follow:
- Under the new tax regime (Section 202(1)): Rs. 75,000 or your actual salary, whichever is less.
- Under the old tax regime: Rs. 50,000 or your actual salary, whichever is less.
For a person in the 30% slab under the new regime, the Rs. 75,000 deduction saves Rs. 22,500 in tax. For someone in the 20% slab, it saves Rs. 15,000. You do nothing to earn this. It is applied automatically.
Example: Priya earns Rs. 12 lakh as annual salary and has opted for the new tax regime. Her employer deducts Rs. 75,000 as standard deduction before computing TDS. Her taxable salary becomes Rs. 11,25,000 (before any other deductions). She never had to submit a bill or proof for this benefit.
Legal Basis: Entry 2 of Section 19(1)
Section 19(1) of the Income Tax Act 2025 lists the deductions allowed while computing income under the head Salaries. Entry 2 of the table under this section is the standard deduction. The exact language of the provision reads:
Standard deduction: (a) Rs. 75,000 or the salary, whichever is less, where income-tax is computed under Section 202(1); (b) Rs. 50,000 or the salary, whichever is less, in any other case.
The phrase ‘whichever is less’ matters only for people earning below these amounts. For anyone earning more than Rs. 75,000 annually, the full deduction applies in every case.
Example: A part-time worker earns Rs. 40,000 in salary for a short assignment. Her standard deduction is Rs. 40,000 (her actual salary), not Rs. 75,000 or Rs. 50,000, because her salary is lower than either amount.
New Regime vs Old Regime: Which Standard Deduction Applies
| Tax Regime | Standard Deduction | Applicable Provision |
| New Tax Regime (Section 202(1)) | Rs. 75,000 | Entry 2(a) of Section 19(1) |
| Old Tax Regime | Rs. 50,000 | Entry 2(b) of Section 19(1) |
Section 202(1) is the new tax regime under the 2025 Act. It applies by default to individuals, HUFs, AOPs, BOIs, and artificial juridical persons unless they opt out. Under the new regime, tax rates are lower but most deductions and exemptions are not available. The higher standard deduction of Rs. 75,000 is one of the few deductions that are available under the new regime. Under the old tax regime (where you opt out of Section 202(1)), you get the lower standard deduction of Rs. 50,000 but retain all Chapter VIII deductions like Section 123 (old 80C), Section 126 (health insurance), and others.
Who Can Claim Standard Deduction?
Salaried Employees
All salaried employees, whether in private sector, government, PSUs, or any other employer, get the standard deduction against their salary income. The employer applies it automatically while computing TDS. It appears in Part B of Form 16 under ‘Deductions under the head Salaries.’
Pensioners
Pension received from a former employer is treated as salary income under the Income Tax Act 2025. Therefore, pensioners are also entitled to the standard deduction against their pension income, at the same amounts: Rs. 75,000 under the new regime or Rs. 50,000 under the old regime.
Example: Mr. Sharma, a retired central government employee, receives Rs. 6 lakh per year as pension. He follows the new tax regime. His pension income after standard deduction = Rs. 6 lakh minus Rs. 75,000 = Rs. 5,25,000. This deduction reduces his taxable pension directly.
Family Pension Recipients
Family pension received by a widow, children, or nominated heirs of a deceased employee is not treated as salary. It is taxed under Income from Other Sources. Therefore, the standard deduction does not apply to family pension. However, a separate deduction is available for family pension under Section 93(1)(d) of the Act:
- Under the new tax regime (Section 202(1)): one-third of family pension or Rs. 25,000, whichever is less.
- Under the old tax regime: one-third of family pension or Rs. 15,000, whichever is less.
Example: Meena receives Rs. 90,000 per year as family pension after the death of her husband. Under the new regime, the deduction is one-third of Rs. 90,000 = Rs. 30,000, or Rs. 25,000, whichever is less. So the deduction is Rs. 25,000. Her taxable family pension = Rs. 90,000 minus Rs. 25,000 = Rs. 65,000.
Self-Employed and Freelancers
Standard deduction is available only against salary income. Self-employed individuals, freelancers, consultants, and business owners cannot claim it. Their income falls under Profits and Gains of Business or Profession, which has its own rules for deducting actual expenses.
Multiple Employers in One Year: A Common Trap
If you worked for two employers in the same Tax Year, either simultaneously or by changing jobs, each employer typically may you the full standard deduction when computing TDS independently. However, when you file your ITR, you can claim only one standard deduction in total, not one from each employer. If both employers have already given the deduction while computing TDS, your ITR will show a lower tax after claiming only one deduction. The excess TDS from both employers will be reflected as a credit, and you may get a refund.
Example: Rohan worked at Company A from April to September 2026 (Salary Rs. 7 lakh). He joined Company B in October 2026 (Salary Rs. 7 lakh). Company A gave Rs. 75,000 standard deduction in its TDS computation. Company B also gave Rs. 75,000. Total salary = Rs. 14 lakh. In his ITR, Rohan claims only Rs. 75,000 standard deduction on the combined Rs. 14 lakh. The tax is computed correctly, and the TDS credit from both employers adjusts the final liability.
Does standard deduction affect other deductions?
No. Standard deduction is applied at the head of income level (Salaries) before arriving at Gross Total Income. It does not interfere with Chapter VIII deductions. Under the old tax regime, you get the standard deduction of Rs. 50,000 AND all applicable Chapter VIII deductions like Section 123 (LIC, PPF, ELSS), home loan interest, health insurance premium, and so on. Under the new tax regime, you get the higher standard deduction of Rs. 75,000, but Chapter VIII deductions (except NPS employer contribution under Section 124(1) and a few others listed in Section 202(2)) are not available.
At a Glance
| Item | Details |
| Provision | Entry 2 of deduction table under Section 19(1) of Income Tax Act 2025 |
| New Tax Regime (Section 202(1)) | Rs. 75,000 or actual salary, whichever is less |
| Old Tax Regime | Rs. 50,000 or actual salary, whichever is less |
| Who can claim | Salaried employees and pensioners |
| Who cannot claim | Self-employed, freelancers, business owners |
| Family pension | Separate deduction: 1/3rd or Rs. 25,000 (new regime) / Rs. 15,000 (old regime), whichever is less |
| How claimed | Employer applies automatically; employee claims in ITR |
| Any bills required | No |
| Number of claims per year | One, regardless of number of employers |
Practical Compliance Checklist
- If you are salaried: You do not need to do anything. Verify your Form 16. Standard deduction should appear under ‘Deductions under the head Salaries.’ If it does not appear, inform your employer immediately.
- If you opted for the new tax regime: Your standard deduction is Rs. 75,000. Confirm your employer is applying the correct higher amount. This is a common error, especially for employers who have not updated their payroll software.
- If you changed jobs this year: Both employers may have given the standard deduction independently. You claim only Rs. 75,000 (or Rs. 50,000 under old regime) total in your ITR. The rest adjusts through TDS credit.
- If you are a pensioner: Include pension under Salaries and claim standard deduction. Your bank or pension-paying authority (if a scheduled bank under Section 392) should factor this in.
- If you receive family pension: You do not get the standard deduction. Claim the separate deduction of one-third or Rs. 25,000 (new regime) or Rs. 15,000 (old regime), whichever is less, under Income from Other Sources.
In Conclusion
Standard deduction is automatic, effortless, and available to every salaried person in India. The difference between Rs. 50,000 and Rs. 75,000 is Rs. 25,000 of taxable income. At 30%, that is Rs. 7,500 in actual tax saved. At 20%, it is Rs. 5,000. It is not a large number by itself, but it is part of the total picture when comparing which tax regime works better for you. Always include it in your regime comparison calculation.
