What this guide covers: The ₹75,000 standard deduction available to salaried employees and pensioners under the new tax regime — who qualifies, how it works, what it means for your actual tax bill, whether you need any proof to claim it, and how it pushes the zero-tax threshold to ₹12.75 lakh in FY 2025-26.
₹75,000 — Standard Deduction, New Tax Regime FY 2025-26. No proof required · No investment needed · Auto-applied by your employer.
1. What Is the Standard Deduction?
The standard deduction is a flat deduction from your salary income that the Income Tax Act allows every salaried individual and pensioner — without requiring any investment, expense proof, or documentation. It reduces your taxable income before your tax is calculated.
Think of it as the government saying: "We know you incur expenses related to your employment — transport, meals, professional development — so we're giving you a flat ₹75,000 deduction automatically." No receipts. No declarations. No paperwork.
Before FY 2018-19, salaried employees could claim a transport allowance of ₹19,200/year and a medical reimbursement of ₹15,000/year — but both required actual expense proof. The standard deduction replaced these with a simpler, higher, proof-free deduction.
Budget 2024 update: The standard deduction under the new tax regime was increased from ₹50,000 to ₹75,000 in Budget 2024 (Finance Act 2024), effective from FY 2024-25 onwards. For FY 2025-26 (AY 2026-27), it remains ₹75,000 under the new regime and ₹50,000 under the old regime.
2. How Much Is It — New vs Old Regime?
| New Tax Regime | Old Tax Regime |
|---|---|
| ₹75,000 Increased in Budget 2024. Available from FY 2024-25 onwards. One of only a handful of deductions permitted in the new regime. |
₹50,000 Unchanged since FY 2019-20. Available alongside 80C, HRA, and all other deductions under the old regime. |
The new regime offers a ₹25,000 higher standard deduction than the old regime. This is one of the intentional design choices to make the new regime more attractive for salaried employees who don't have heavy 80C investments or HRA. For a full comparison of the two regimes, see our new vs old tax regime guide for FY 2025-26.
3. Who Qualifies for the Standard Deduction?
| Category | Eligible? | Notes |
|---|---|---|
| Salaried employees (private / government) | ✅ Yes | Standard deduction of ₹75,000 in new regime, ₹50,000 in old |
| Pensioners (ex-employee pension) | ✅ Yes | Pension from former employer is taxed as salary — deduction applies |
| Part-time / contract salaried employees | ✅ Yes | As long as income is under "Salary" head — eligible regardless of whether full-time |
| Freelancers / self-employed professionals | ❌ No | Income taxable under PGBP head — not salary. Different expense deduction rules apply. |
| Business owners | ❌ No | Same as above — standard deduction is not available on business income |
| Family pensioners (widow / family) | ❌ No | Family pension is under "Other Sources" head. Different deduction: 1/3rd or ₹25,000 max u/s 57(iia) |
| Rental income earners | ❌ No | Rental income falls under "House Property" head — 30% standard deduction available separately |
Important for job changers: If you had two employers during FY 2025-26, the standard deduction is ₹75,000 for the entire year — not per employer. Your final ITR should show only ₹75,000 total, even if each employer separately computed their TDS allowing ₹75,000.
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4. Do You Need Any Proof or Investment?
Absolutely not. This is the defining feature of the standard deduction — it requires zero documentation. Specifically:
- No receipts or bills of any kind
- No investment in PPF, ELSS, LIC, or any 80C instrument
- No rent receipts or HRA declaration
- No medical bills or health insurance premium
- No employer declaration form to fill
- No form to submit to the IT Department
Your employer automatically deducts it while computing TDS, and it appears in your Form 16 Part B under "Standard Deduction." When you file your ITR, it is pre-filled in the return form automatically. For more on how to read your Form 16, see our Form 16 explained guide.
This is the new regime's gift to people who don't invest in 80C. If you are not making disciplined investments in PPF, ELSS, or LIC — you still get a guaranteed ₹75,000 off your taxable income without doing anything. Zero effort, guaranteed benefit.
5. How Much Tax Does the Standard Deduction Actually Save You?
The tax saved depends on which slab the ₹75,000 falls in — i.e., what your marginal tax rate is. Here's the actual tax saving at different income levels under the new regime:
| Gross Salary | Marginal Slab Rate | Tax Saved by ₹75,000 Deduction | After Cess (4%) |
|---|---|---|---|
| Up to ₹8,75,000 | 5% | ₹3,750 | ₹3,900 |
| ₹8,75,001 – ₹12,75,000 | 10% | ₹7,500 | ₹7,800 |
| ₹12,75,001 – ₹16,75,000 | 15% | ₹11,250 | ₹11,700 |
| ₹16,75,001 – ₹20,75,000 | 20% | ₹15,000 | ₹15,600 |
| ₹20,75,001 – ₹24,75,000 | 25% | ₹18,750 | ₹19,500 |
| Above ₹24,75,000 | 30% | ₹22,500 | ₹23,400 |
For a mid-level employee earning ₹15 lakh, the ₹75,000 standard deduction directly saves ₹11,700 in tax every year — guaranteed, with zero effort. For someone earning ₹25L+, it saves ₹23,400 annually.
6. Standard Deduction + Section 87A Rebate = Zero Tax up to ₹12.75 Lakh
This is the most powerful combination in the new tax regime. Understanding it can change how you think about your tax liability entirely.
| Example: Gross Salary = ₹12,75,000 → Tax = ₹0 | |
|---|---|
| Gross Salary | ₹12,75,000 |
| (-) Standard Deduction (auto, no proof) | - ₹75,000 |
| Net Taxable Income | ₹12,00,000 |
| Tax on ₹12,00,000 (as per new regime slabs) | ₹60,000 |
| (-) Section 87A Rebate (income ≤ ₹12L) | - ₹60,000 |
| Final Tax Payable | ₹0 |
The logic: The Section 87A rebate wipes out all tax on income up to ₹12 lakh. The standard deduction ensures that a salaried person earning up to ₹12,75,000 gross has taxable income of exactly ₹12 lakh — and pays zero tax.
Critical caveat — the cliff edge above ₹12 lakh: If your net taxable income is ₹12,00,001 (just ₹1 above ₹12 lakh), the 87A rebate does NOT apply. You pay full tax on the entire ₹12,00,001 — which is approximately ₹60,000. This is the "rebate cliff." There is no marginal relief. Be aware of this when comparing CTC offers near the ₹12–12.75 lakh range.
Let's see what happens at ₹12,80,000 gross:
| Example: Gross Salary = ₹12,80,000 → Crosses the threshold | |
|---|---|
| Gross Salary | ₹12,80,000 |
| (-) Standard Deduction | - ₹75,000 |
| Net Taxable Income | ₹12,05,000 |
| Tax (87A rebate NOT available above ₹12L) | ₹60,750 |
| 4% Cess | ₹2,430 |
| Final Tax Payable | ₹63,180 |
The takeaway: At ₹12,75,000 gross salary — zero tax. At ₹12,80,000 gross salary — ₹63,180 tax. A ₹5,000 increase in gross salary costs you ₹63,180 in tax. This is the 87A cliff and it is something every salaried person near this range must understand before negotiating salary.
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7. How to Claim It in Your ITR
The standard deduction is one of the easiest items in your ITR because it is largely automated. For a step-by-step walkthrough of the full ITR filing process, see our guide to filing ITR online for FY 2025-26.
- It appears in your Form 16 Part B — Your employer automatically deducts ₹75,000 while computing your TDS. Check Form 16 Part B — there will be a line item reading "Standard Deduction u/s 16(ia) — ₹75,000".
- It is pre-filled in the ITR portal — When you log in to incometax.gov.in and start filing, the standard deduction of ₹75,000 is already pre-filled in the salary schedule. You don't need to enter it manually.
- Verify it matches Form 16 — Cross-check that the pre-filled amount (₹75,000) matches what appears in your Form 16 Part B. If there's a discrepancy, correct it before submitting your return.
- No separate declaration needed — Unlike 80C or HRA, you don't need to fill any separate schedule or upload any document for the standard deduction. It sits in the salary schedule and flows automatically into the tax computation.
If you have two Form 16s: The ITR portal may pre-fill ₹75,000 from the first employer and show another ₹75,000 from the second. Manually correct the total to ₹75,000 — the limit applies once per year, not once per employer. A CA handles this automatically.
8. Common Mistakes Around Standard Deduction
Mistake 1: Claiming ₹75,000 twice when filing with two Form 16s
The most common error. Both employers compute TDS allowing ₹75,000 each. When you file the combined ITR, the portal may show ₹1,50,000 in deductions if you simply import both. The correct total is ₹75,000 only — which means you owe additional tax if both employers separately allowed it.
Mistake 2: Confusing standard deduction with 80C
Standard deduction and 80C are completely different. Standard deduction (₹75,000) requires no investment and is available in both regimes. 80C (up to ₹1,50,000) requires actual investment in PPF, ELSS, LIC etc. and is available only under the old regime. You cannot substitute one for the other.
Mistake 3: Pensioners not claiming it
Many pensioners — especially those filing their own returns — miss the standard deduction entirely because they don't have an employer issuing Form 16. If you receive pension from your former employer, you are eligible for ₹75,000 standard deduction. Enter it manually in the salary schedule.
Mistake 4: Thinking it's ₹50,000 in the new regime
Some people — and even some older CA software — still show ₹50,000 for the new regime. It was increased to ₹75,000 from FY 2024-25 (Budget 2024). For FY 2025-26, it is definitively ₹75,000 under the new regime.
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Frequently Asked Questions
What is the standard deduction in the new tax regime for FY 2025-26?
The standard deduction under the new tax regime for FY 2025-26 (AY 2026-27) is ₹75,000. This was increased from ₹50,000 to ₹75,000 in Budget 2024 (Finance Act 2024), effective from FY 2024-25 onwards. It is available to all salaried employees and pensioners automatically — no proof, investment, or documentation required.
Do I need to submit any proof or investment to claim the standard deduction?
No — absolutely none. The standard deduction requires zero proof, zero investment, and zero documentation. Your employer applies it automatically while computing TDS, and it appears in your Form 16. When you file your ITR, it is pre-filled in the salary schedule. Nothing to do on your part.
Is the standard deduction available in both new and old tax regimes?
Yes, but the amounts differ. New regime: ₹75,000. Old regime: ₹50,000. Both are available without proof. The higher standard deduction in the new regime is one of its key advantages over the old regime.
Can pensioners claim the standard deduction?
Yes. Pensioners receiving pension from a former employer can claim ₹75,000 standard deduction under the new regime (₹50,000 under old). However, family pension (received by a widow or family member after the employee's death) is classified under "Other Sources" — it gets a different deduction of 1/3rd of pension or ₹25,000 (whichever is lower) under Section 57(iia), not the standard deduction.
How does the standard deduction help in reaching zero tax at ₹12.75 lakh?
Under the new regime, Section 87A provides a full tax rebate on income up to ₹12 lakh. For salaried persons, the ₹75,000 standard deduction reduces gross salary of ₹12,75,000 to a net taxable income of ₹12,00,000 — exactly at the 87A rebate threshold. Result: zero tax. Earn ₹1 more (making taxable income ₹12,00,001), and the rebate disappears entirely — you'd pay approximately ₹63,000 in tax.
What if I have two employers in the same year — do I get double the standard deduction?
No. The standard deduction is ₹75,000 per year per taxpayer — not per employer. If you changed jobs during FY 2025-26, both employers may have separately allowed ₹75,000 while computing their TDS. When you file the combined ITR, the total standard deduction must be ₹75,000 only. Failing to correct this means you under-report taxable income — which can lead to a notice.
Is the standard deduction available for freelancers and self-employed professionals?
No. The standard deduction of ₹75,000 applies only to income taxable under "Income from Salaries." Freelancers, consultants, and business owners whose income falls under "Profits and Gains from Business or Profession" (PGBP) cannot claim this deduction. They have separate provisions for deducting business expenses against their income.
How is the standard deduction different from the transport allowance and medical reimbursement it replaced?
Before FY 2018-19, salaried employees could claim: (1) Transport allowance exemption of ₹19,200/year and (2) Medical reimbursement of ₹15,000/year — both requiring proof. Together these totalled ₹34,200. The standard deduction replaced both at ₹40,000 (FY 2018-19), then ₹50,000 (FY 2019-20 to FY 2023-24), and now ₹75,000 (new regime, FY 2024-25 onwards). The key upgrade: no proof needed and a significantly higher amount.