Standard Deduction for Salaried Employees: What Salaried Taxpayers Should Know
Disclaimer: This article is for general information/education and is not investment advice. The information is shared in good faith and for general informational purposes only. Ujjivan SFB does not make any representations or warranties regarding the accuracy, completeness, or reliability of the content.
September 24, 2026
The standard deduction is a fixed amount deducted from your income taxable under the head Salaries before income tax is calculated. For this purpose, salary does not mean only your basic salary or the CTC stated in your employment contract.
The calculation starts with the income chargeable under the head Salaries before the standard deduction is applied. This may include taxable salary, allowances, bonuses, commissions and perquisites.
How Much Standard Deduction Can You Claim?
The maximum deduction depends on the tax regime you select.
| Tax regime | Maximum standard deduction |
|---|---|
| New tax regime | ₹75,000 |
| Old tax regime | ₹50,000 |
Suppose your eligible annual salary is ₹10 lakh and, as per the tax regime you opted for, a standard deduction of ₹75,000 is automatically applied to your salary. So your taxable salary income after the deduction will be ₹9.25 lakh, and tax will be calculated on this reduced amount, along with any other taxable income you have.
The deduction does not mean that the government pays you ₹75,000. It simply reduces the portion of your salary considered for tax. You also do not need to spend ₹75,000 or invest it in a tax-saving product.
Which Income Tax Act Applies to Standard Deduction?
The applicable provision depends on when you earned the income.
| Income period | Governing law | Provision |
|---|---|---|
| Up to 31 March 2026 | Income-tax Act, 1961 | Section 16 |
| From 1 April 2026 | Income-tax Act, 2025 | Section 19 |
The law governing your deduction depends on when you earned the salary, while the amount of the deduction depends on the tax regime you use. Salary earned up to 31 March 2026 is governed by the Income-tax Act, 1961. Salary earned from 1 April 2026 is governed by the Income-tax Act, 2025.
So, if you are filing an IT return for income earned during Financial Year 2025–26, the Income-tax Act, 1961 continues to apply to that income. For income earned from 1 April 2026, the Income-tax Act, 2025 applies.
Who Can Claim the Standard Deduction?
You can claim the standard deduction if you receive income taxable under the head Salaries. This may include:
The deduction depends on the nature of the income rather than the type of employer or your employment arrangement.
You cannot claim the salary standard deduction against freelance, professional, consulting or business income. It also does not reduce interest, rent, capital gains or family pension. If you receive both salary and freelance income, you may claim the standard deduction against the eligible salary portion.
A regular pension from your former employer is generally taxed under the head Salaries. Family pension is taxed under Income from Other Sources and follows a separate deduction rule.
How is the Standard Deduction Calculated?
Suppose your eligible annual salary income is ₹10 lakh.
Under the new tax regime:
₹10,00,000 - ₹75,000 = ₹9,25,000
Your salary income after the standard deduction will be ₹9.25 lakh.
Under the old tax regime:
₹10,00,000 - ₹50,000 = ₹9,50,000
Your salary income after the standard deduction will be ₹9.50 lakh.
Note: These figures may not represent your final taxable income. Other income, exemptions, deductions and eligible losses may affect the final calculation.
Is Standard Deduction the Same as a Tax Rebate?
No. A standard deduction and a tax rebate apply at different stages of your tax calculation.
| Standard deduction | Tax rebate |
|---|---|
| Reduces your taxable salary | Reduces the tax calculated on your income |
| Applied before tax is calculated | Applied after tax is calculated |
| Available against eligible salary income | Subject to separate eligibility conditions |
Suppose you are a resident salaried individual earning ₹12.75 lakh under the new tax regime. You have no other income, and all your income is taxed at the ordinary slab rates.
The standard deduction reduces your income, while the rebate reduces your calculated tax. The rebate is available only to eligible resident individuals. An NRI may claim the standard deduction against salary taxable in India but cannot claim a rebate restricted to resident individuals.
How Do You Claim the Standard Deduction?
You do not normally need to submit a separate application, investment document or expense receipt. Your employer will usually consider the standard deduction while estimating your taxable salary and deducting TDS. You can check the calculation in Form 130 (replacing the previous Form 16) after the end of the tax year.
When filing your Income Tax Return, report your salary using the relevant Form 130 figures and verify that the correct standard deduction has been applied. If your employer did not consider the deduction while calculating TDS, you may still claim it in your return if you are eligible. Any excess TDS may then be considered while calculating your refund.
If you worked for more than one employer, combine the salary received from all employers. The standard deduction applies once against your total salary income for the year. You cannot claim the full deduction separately for every job.
Final Thoughts
The standard deduction reduces your taxable salary without requiring you to make an investment or provide proof of expenses. You may claim up to ₹75,000 under the new tax regime or ₹50,000 under the old regime, subject to the amount of your eligible salary income.
Check the deduction shown in Form 130 and verify it again when filing your return. When choosing between the old and new regimes, compare your complete tax liability rather than considering the standard deduction alone.
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