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What is Standard Deduction for Salaried Individuals in New & Old Tax Regime?
Written by Hatim Dudhiyawala
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Standard deduction is a fixed amount that taxpayers, including NRIs, can subtract from their gross income to reduce their overall taxable income. Individuals receving salary or a pension can claim a standard deduction of up to INR 50,000 (Old regime) and INR 75,000 (New regime) while filing their ITR. You don't need to submit any documents or proofs to claim the deduction, which reduces paperwork and makes claiming the deduction easier, irrespective of how much you earn. However, you will need to submit documents and complete forms when filing your income tax returns, such as Form 26AS and TDS certificates.
In this blog, we will discuss what standard deductions are and the available deductions for salaried individuals under both the new and old regimes.
Key Takeaways
- The standard deduction is a fixed amount that doesn't require any documents, expenditure proof, or bill submissions.
- The standard deduction under the new tax regime is INR. 75,000 and INR 50,000 under the old tax regime for salaried individuals and pensioners (resident/NRI).
- Self-employed professionals, freelancers, and business owners cannot claim these standard deductions.
What is the Standard Deduction?
The standard deduction is a fixed amount that taxpayers (residents/NRIs) can subtract from their gross income to reduce their tax burden, as per Section 16 of the Income Tax Act, 1961. Every person receiving a salary or a pension can claim a standard deduction while filing their ITR (income tax return) without the need for any supporting documents or proofs.
What are the Standard Deductions Available Under the New and Old Tax Regime?
For salaried individuals and NRIs, the standard deduction available under both the old and new tax regimes for the Financial Year (FY) 2025-26 (AY 2026-2027) is as follows:
- Old Tax Regime: INR 50,000
- New Tax Regime: INR 75,000
Budget 2026 Expectations: Under the new tax regime, it is expected that the standard deduction might be increased to Rs. 1 lakh from Rs. 75,000 to increase the disposable income.
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What are the Benefits of the Standard Deduction?
The standard deduction is a fixed amount that is available to salaried individuals to reduce their taxability and overall tax burden. Here are some other benefits of the standard deduction:
- No Conditions: The standard deduction is provided to every salaried individual without any conditions.
- Reduces Tax Liability: It lowers taxable income directly, thereby reducing the overall tax liability for salaried individuals and pensioners.
- Ease Filing ITR: Standard deduction can be claimed easily while filing the ITR, as there is no need to submit any supporting documents or proofs. It reduces paperwork and allows deductions irrespective of the actual expenditure.
- Tax Relief to Middle-Class Salaried Persons and Pensioners: It offers tax relief specifically to middle-class salaried individuals and extends benefits to pensioners.
What are the Documents Required for the Standard Deduction?
You don't need to submit any supporting documents to claim the standard deduction for salaried income. However, you need to submit the following documents and fill out the necessary forms while filing income tax returns:
- Investment documents
- Form 26AS and Form AIS
- TDS (Tax Deducted at Source) certificates
- Income statements from interest or fixed deposits
- Bank statements for the relevant financial year
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The Bottom Line
The standard deduction is the best way for salaried individuals and pensioners to reduce their taxable income without following any complex paperwork. It also offers tax relief to middle-class salaried individuals. The deduction is available to both salaried individuals and pensioners (residents/NRIs) under both old (INR 50,000) and new (INR 75,000) tax regimes.
Moreover, apart from the standard deduction, there are several other deductions available for salaried individuals and pensioners. To maximize savings and know more about the available options, seek assistance from a professional at Savetaxs. They can help you understand the deductions you can claim and make every process easier for you. They can also help with NRI taxation, repatriation, banking, investment, and financial matters. Connect with us right away, as we are actively serving our clients 24/7 across all time zones, and get personalized guidance from the experts.
Glossary
- Annual Information Statement: Annual Information Statement Includes Taxpayers' Information, Including Securities, Interests, Dividends, and Transactions.
- Income Tax Act: Income Tax Act, an Act to Manage and Govern the Direct Taxes, by Levying, Collecting, and Administering.
- Income Tax Return: Income Tax Return, Filed by Taxpayers, Contains a Formal Record of the Collected Tax by the Government.
- ITR Form: Income Tax Return form, a form to report annual income and taxes, used by taxpayers.
- Taxation: Taxation, the Process of Collecting Revenue From People, Used to Fund the Public Services by the Government.
- Budget: A Complete Guide to Understanding Budgeting, Its Types, Benefits, and How to Plan Your Finances Effectively
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- TDS Deduction on Rental Property Owned by NRI
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- Section 195 of Income Tax Act - TDS Applicability for NRI
- TDS Refund for NRI: How to Claim Excess TDS in India
- Double Tax Avoidance Agreement (DTAA) Between India and UK
- Tax Residency Certificate (TRC) in India
Disclaimer
Note: This guide is for information purposes only. The views expressed in this guide are personal and do not constitute the views of Savetaxs. Savetaxs or the author will not be responsible for any direct or indirect loss incurred by the reader for taking any decision based on the information or the contents. It is advisable to consult either a CA, CS, CPA or a professional tax expert from the Savetaxs team, as they are familiar with the current regulations and help you make accurate decisions and maintain accuracy throughout the whole process.
About Author
Hatim Dudhiyawala is a Certified Public Accountant (CPA) with SaveTaxs and specializes in Indian and NRI taxation. He advises individuals, NRIs, and businesses on income tax filing, capital gains taxation, DTAA benefits, fund repatriation, and tax compliance. With experience in cross-border tax matters, Hatim helps taxpayers understand complex regulations and make informed decisions. Through his articles, he shares practical insights to help readers stay compliant and manage their tax obligations with confidence. See Full Bio
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Frequently Asked Questions
Only those individuals who have income from salary can claim the standard deduction.
The standard deduction for FY 2025-26 is INR 50,000 under the old regime and INR 75,000 under the new regime.
No, you can only claim the standard deduction and cannot claim the transport and medical allowance.
Salaried employees and pensioners can claim a Rs. 75,000 flat deduction from gross salary under the new regime. No documentation or proofs are required to claim the deduction.
Maximum deduction of Rs. 50,000 is available under the old regime along with other exemptions (80C, 80D, HRA, etc.).