📌 Introduction
If you’re a salaried employee or pensioner in India, you’re entitled to various tax benefits. One of the most important among them is the Standard Deduction — a flat amount deducted from your salary or pension income before tax is calculated.
Reintroduced in Budget 2018, this deduction simplifies tax planning and has now become a permanent benefit under both the Old and New Tax Regimes.
In this guide by GST Suvidha Centre, we’ll explain what Standard Deduction means, its latest limits, the applicable section of the Income Tax Act, and how it works for Financial Year 2024-25 (Assessment Year 2025-26).
📖 What is Standard Deduction?
The Standard Deduction is a fixed, hassle-free deduction from salary or pension income to cover general expenses incurred during employment or retirement.
Unlike earlier exemptions like Transport Allowance and Medical Reimbursement, you don’t need to submit any bills or proofs to claim this deduction.
📜 Applicable Section in the Income Tax Act
The Standard Deduction is covered under Section 16(ia) of the Income Tax Act, 1961.
It provides:
“A deduction of ₹50,000 or the amount of salary, whichever is less, shall be allowed from the income chargeable under the head ‘Salaries.’”
This benefit applies to:
- Salaried individuals
- Pensioners
💸 Standard Deduction Limit for FY 2024-25 (AY 2025-26)
| Category | Deduction Limit |
| Salaried Men | ₹50,000 |
| Salaried Women | ₹50,000 |
| Pensioners | ₹50,000 |
👉 Note: No special or increased limit for women — the deduction remains uniform for all categories.
📌 Is Standard Deduction Available Under the New Tax Regime?
✅ Yes!
From FY 2023-24 (AY 2024-25) onwards, the Standard Deduction of ₹50,000 is also available under the New Tax Regime (Section 115BAC).
When the New Regime was first introduced in Budget 2020, most exemptions and deductions were removed. However, it was amended in Budget 2023 to include the Standard Deduction.
📊 Deduction Availability Summary:
| Deduction | Old Regime | New Regime (from FY 2023-24) |
| Standard Deduction | ₹50,000 | ₹75000 |
✅ Key Highlights
- Applicable to salaried individuals and pensioners
- No bills or documentation needed
- Available under both Old and New Tax Regimes
- Replaces earlier Transport Allowance and Medical Reimbursement exemptions
📊 Example Calculation (FY 2024-25)
| Particulars | Amount (₹) |
| Gross Annual Salary | 8,00,000 |
| Less: Standard Deduction | 50,000 |
| Net Taxable Salary | 7,50,000 |
Tax is then calculated on ₹7,50,000 as per the chosen tax regime.
📌 Conclusion
The Standard Deduction under Section 16(ia) remains one of the easiest and most effective tax relief options for salaried individuals and pensioners in India.
With its extension to the New Tax Regime from FY 2023-24 onwards, it ensures equal tax benefits for all taxpayers, irrespective of their tax structure.
✅ Before filing your income tax return, make sure to factor in this deduction while computing your taxable salary.
✨ Pro Tip from GST Suvidha Centre:
If you’re considering switching between tax regimes, always compare your tax liability under both systems — including the Standard Deduction — for better tax planning.
📣 Need Assistance with Income Tax Filing?
Visit GST Suvidha Centre today and connect with our tax experts for hassle-free, accurate, and affordable filing services!