About the standard deduction in India
The standard deduction is a flat amount that salaried employees and pensioners in India can subtract from their gross salary before income tax is calculated, under Section 16(ia) of the Income Tax Act. It requires no bills, proofs, or declarations: every eligible taxpayer simply deducts the fixed figure, which lowers taxable income and therefore the tax payable. This page tracks how that amount has changed year by year, from its reintroduction in 2018 to the higher figures available under the new tax regime today.
The deduction has a stop-start history. It existed in older tax law, was withdrawn in 2005, and then returned in Budget 2018 at 40,000 rupees, replacing the earlier transport allowance (19,200 rupees) and medical reimbursement (15,000 rupees) that together required employees to keep receipts. Budget 2019 raised it to 50,000 rupees. When the new tax regime became the default, Budget 2024 lifted the new-regime standard deduction to 75,000 rupees for FY 2024-25, while the old regime stayed at 50,000 rupees. Knowing the figure for the year you are filing is essential, because applying an outdated number misstates your tax.
For a quick US comparison, the standard deduction works the same way there but with very different figures and a much smoother history: it was 6,350 dollars for a single filer in 2017, roughly doubled to 12,000 dollars in 2018 under the Tax Cuts and Jobs Act, and has risen with inflation to about 15,000 dollars for 2026. The India figures on this page are in rupees and follow India's own Section 16(ia) timeline, which is the one the table above reflects.
How it works
The standard deduction is subtracted from your gross salary income straight away, before any tax slabs are applied. It is a fixed amount, not a percentage, so it does not change with your salary as long as you are eligible.
Because it lowers the income that the tax slabs act on, the rupee tax saving equals the deduction multiplied by your marginal tax rate. A taxpayer in the 20 percent slab saves 20 percent of the deduction; one in the 30 percent slab saves 30 percent. The deduction cannot exceed your salary, so a very small salary is reduced only to zero, not below.
Worked example
Suppose a salaried employee earns a gross salary of 12,00,000 rupees in FY 2025-26 and files under the new regime, where the standard deduction is 75,000 rupees.
- Gross salary: 12,00,000 rupees.
- Apply the standard deduction: 12,00,000 - 75,000 = 11,25,000 rupees of taxable salary.
- Tax saving: at a 20 percent marginal rate, the 75,000 deduction saves 75,000 x 20 percent = 15,000 rupees of tax.
- No paperwork: the deduction is claimed automatically; no receipts are needed.
Reference: standard deduction by year
Year-wise standard deduction for salaried employees under Section 16(ia).
| Financial Year | Old Regime | New Regime |
|---|---|---|
| FY 2017-18 and earlier | Nil | Not applicable |
| FY 2018-19 | Rs 40,000 | Not applicable |
| FY 2019-20 to FY 2022-23 | Rs 50,000 | Nil |
| FY 2023-24 | Rs 50,000 | Rs 50,000 |
| FY 2024-25 and FY 2025-26 | Rs 50,000 | Rs 75,000 |
Common pitfalls
- Using the wrong year's figure. The amount changed from 40,000 to 50,000 to 75,000 over time. Filing with an outdated number misstates your taxable income.
- Mixing up the regimes. For FY 2025-26 the new regime gives 75,000 rupees but the old regime only 50,000. Use the figure for the regime you are actually filing under.
- Thinking you need bills. Unlike HRA or LTA, the standard deduction needs no proof. It is a flat amount claimed automatically against salary.
- Claiming it without salary income. It applies to salary and pension income only. A purely business or capital-gains income does not qualify for it.
- Confusing it with family pension deduction. Family pensioners do not get the salary standard deduction; they get a separate, smaller deduction under Section 57(iia).
Frequently asked questions
What is the standard deduction for FY 2025-26?
For FY 2025-26, the standard deduction is 50,000 rupees under the old tax regime and 75,000 rupees under the new tax regime. It is a flat amount subtracted from gross salary or pension income before tax is calculated, claimed automatically with no bills or proof required.
When was the standard deduction reintroduced in India?
It returned in Budget 2018 (FY 2018-19) at 40,000 rupees, replacing the transport allowance of 19,200 rupees and medical reimbursement of 15,000 rupees that previously required receipts. Budget 2019 raised it to 50,000 rupees, and Budget 2024 increased the new-regime figure to 75,000 rupees from FY 2024-25.
Who can claim the standard deduction?
All salaried employees, with no minimum salary threshold, and pensioners receiving pension from a former employer can claim it under Section 16(ia). Family pensioners are not eligible for this salary deduction; they instead receive a separate, smaller deduction under Section 57(iia), the lower of 15,000 rupees or one-third of the pension.
Do I need to submit bills to claim the standard deduction?
No. Unlike HRA or leave travel allowance, the standard deduction requires no bills, receipts, or declarations. It is a fixed flat amount applied automatically against your salary or pension income, which is precisely why it replaced the proof-heavy transport and medical allowances in 2018.
Is the standard deduction different in the old and new tax regimes?
Yes. For FY 2025-26 the old regime allows 50,000 rupees while the new regime allows 75,000 rupees. The new regime did not offer the deduction at all until FY 2023-24, when it was added at 50,000 rupees, then raised to 75,000 in Budget 2024. Always use the figure for the regime you file under.
Why are the results different from another standard deduction history tool?
Most likely: different formula assumptions, different default values, different rounding rules, or different applicable rates. Check the methodology if both tools document it. Both can be valid for different scenarios.