For FY 2025-26 (AY 2026-27) the new tax regime hands every salaried employee and pensioner a flat ₹75,000 deduction — no bills, no rent receipts, no investment, no proof. Here is exactly who gets it, how much, and how it quietly makes a ₹12.75 lakh salary tax-free.
1. The one deduction the new regime didn't take away
When people move to the new tax regime, the common worry is: "I lose everything — 80C, HRA, home loan interest." That is mostly true. But one valuable deduction survives, and it is the easiest one of all to claim — the standard deduction.
The standard deduction is a fixed, lump-sum amount subtracted straight from your salary or pension income before tax is calculated. You don't spend anything to earn it. You don't invest anything. You don't keep a single receipt. If you have salary or pension income, it is simply yours.
The headline number: Under the new tax regime for FY 2025-26, the standard deduction is a flat ₹75,000 for salaried employees and pensioners — claimed automatically, with zero documentation.
2. How much do you actually get?
The amount depends on the regime you're in and the type of income. For FY 2025-26 (AY 2026-27):
| Who you are | New Tax Regime | Old Tax Regime |
|---|---|---|
| Salaried employee | ₹75,000 | ₹50,000 |
| Pensioner (pension taxed as salary) | ₹75,000 | ₹50,000 |
| Family pensioner (pension after death of employee) | ₹25,000 | ₹15,000 |
| Freelancer / business income only | Not available | Not available |
Two things stand out. First, the new regime is actually more generous here — ₹75,000 versus ₹50,000 in the old regime, a ₹25,000 head start. Second, the deduction is attached to a type of income (salary or pension), not to you as a person — which matters in the edge cases below.
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3. "Without proof" — what that really means
Almost every other tax break demands evidence. HRA needs rent receipts and a landlord PAN. Section 80C needs investment statements. Section 80D needs insurance premium proof. The standard deduction needs nothing.
It is a statutory flat deduction. The law grants it for the simple fact that earning a salary involves unavoidable costs the government chooses not to scrutinise. So there is:
- No bill or receipt to collect or store.
- No investment to make before 31 March.
- No declaration to your employer to "unlock" it.
- No minimum service period — even one month of salary in the year qualifies you for the full ₹75,000.
In practice, your employer already applies it inside your monthly TDS, and it appears on your Form 16. When your return is filed, it is applied again on the computation — automatically, every time.
4. The quiet magic: ₹12.75 lakh tax-free for salaried
This small deduction does something big when it meets the Section 87A rebate. Under the new regime for FY 2025-26, income up to ₹12 lakh attracts zero tax because of the enhanced 87A rebate. The standard deduction sits on top of that:
| Step | Amount |
|---|---|
| Gross salary | ₹12,75,000 |
| Less: Standard deduction | – ₹75,000 |
| Taxable income | ₹12,00,000 |
| Tax before rebate | ₹60,000 |
| Less: Section 87A rebate | – ₹60,000 |
| Final tax payable | ₹0 |
Without the standard deduction, a ₹12.75 lakh earner would have ₹12.75 lakh taxable, lose the rebate, and pay real tax. The free ₹75,000 is precisely what pulls them under the ₹12 lakh line. We break the rebate side down fully in our companion guide: Section 87A Rebate in Simple Language — Do You Qualify for Zero Tax?
Not sure the new regime is right for you? Standard deduction is just one lever. Whether the new or old regime saves you more depends on your full profile. A real Chartered Accountant at FirstReports computes both, picks the cheaper one, and files — fixed price, from ₹999. File ITR with a real CA — from ₹999 →
5. Five traps people fall into
"Automatic and no proof" does not mean "impossible to get wrong." These are the mistakes our CAs see every season:
- Claiming it twice on two Form 16s. Changed jobs mid-year? You still get ₹75,000 total — not ₹75,000 per employer. Both employers may each apply it in their TDS, leaving you with under-deducted tax and a notice later.
- Expecting it on freelance income. If your income is professional or business income (you raise invoices, not a salary), there is no standard deduction. Different rules — like Section 44ADA presumptive taxation — apply instead.
- Confusing it with the ₹50,000 old-regime figure. Old guides and old Form 16 formats still float around. For the new regime, FY 2025-26, the number is ₹75,000.
- Family pension mix-up. A family pensioner gets ₹25,000, not ₹75,000 — and it is a deduction from "Income from Other Sources," not salary. Easy to over-claim.
- Assuming it needs an investment. It doesn't. People sometimes "skip" it thinking they missed a deadline to invest. There is no deadline and no investment — it is unconditional.
Every one of these mistakes costs real money — wrong deductions, under-deducted TDS, or a notice. A CA at FirstReports files your return correctly the first time. From ₹999 · Deadline: 31 July 2026.
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6. Does it continue beyond FY 2025-26?
Yes. The Union Budget 2026 retained the structure introduced in Budget 2025 — the ₹75,000 standard deduction under the new regime continues for FY 2026-27 (AY 2027-28) as well, alongside the same slabs and the ₹12 lakh rebate threshold. For the return you are filing now, though, the financial year that matters is FY 2025-26 (AY 2026-27), with a due date of 31 July 2026 for most salaried individuals.
Bottom line: The standard deduction is the rare tax benefit that is large, automatic, proof-free, and bigger in the new regime. The only real skill is using it correctly — once, on the right income, in the right regime.
Frequently Asked Questions
What is the standard deduction in the new tax regime for FY 2025-26?
It is a flat ₹75,000 for salaried employees and pensioners under the new regime for FY 2025-26 (AY 2026-27). It is subtracted automatically from salary or pension income — no bills, receipts or investment proof are needed.
Do I need to submit any proof to claim the standard deduction?
No. It is a fixed statutory deduction given purely because you have salary or pension income. You submit nothing — no rent receipts, no investment statements, no supporting documents.
Is the standard deduction higher in the new regime or the old regime?
Higher in the new regime. The new regime gives ₹75,000; the old regime gives ₹50,000 for salaried individuals. That ₹25,000 gap is one reason the new regime suits salaried people with few other deductions.
Can pensioners claim the standard deduction in the new tax regime?
Yes. Pensioners whose pension is taxed as salary get the full ₹75,000. Family pensioners (receiving pension after the death of the employee) get a separate ₹25,000 standard deduction under the new regime for FY 2025-26.
I have two Form 16s from two employers — do I get the standard deduction twice?
No. It is a single per-person limit of ₹75,000 for the year, not per employer or per Form 16. If both employers applied it in their TDS, your total tax may be under-deducted — your CA corrects this before filing.
Does the standard deduction make my salary tax-free up to ₹12.75 lakh?
For salaried individuals under the new regime, yes — a gross salary up to ₹12.75 lakh is effectively tax-free for FY 2025-26. The ₹75,000 deduction brings taxable income to ₹12 lakh, and the Section 87A rebate then makes the tax on ₹12 lakh zero.
Can a freelancer or business owner claim the ₹75,000 standard deduction?
No. The standard deduction applies only to salary or pension income. Pure freelance or business income does not qualify, although such taxpayers have other provisions like Section 44ADA presumptive taxation.
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