Standard Deduction in New Tax Regime: ₹75,000 for Salaried Employees
The ₹75,000 standard deduction is now available under the new tax regime too. Here is exactly how it works, who qualifies, and how it affects your take-home.
All figures and facts in this article are sourced directly from primary government and regulatory publications — including the Reserve Bank of India, SEBI, EPFO, the Income Tax Department, PFRDA, and IRDAI — and verified before publication. No claim is published from a single source without corroboration.
What is the standard deduction?
The standard deduction is a flat amount deducted from salary or pension income before calculating income tax. It requires no proof of expenditure — it is automatic and available to every salaried employee and pensioner.
The current amount is ₹75,000 per year, applicable from FY 2024-25 onwards. It was increased from ₹50,000 (which applied from FY 2019-20 to FY 2023-24) by Budget 2024.
Is standard deduction available in the new tax regime?
Yes. From FY 2024-25, the ₹75,000 standard deduction is available in the new tax regime as well. Before this, it was only available under the old regime — its extension to the new regime was a key change in Budget 2024.
The deduction is provided under Section 16(ia) of the Income Tax Act, and its availability in the new regime is specified in the proviso to Section 115BAC, as amended by the Finance Act 2024.
Who qualifies for the standard deduction?
The standard deduction is available to:
- Salaried employees — all individuals receiving salary from one or more employers
- Pensioners — individuals receiving pension from a former employer (not family pension, which has its own deduction)
It is not available to:
- Self-employed individuals or professionals
- Business owners
- Those with only investment income (dividends, capital gains, interest)
If you are a consultant receiving fees (professional income, not salary), you do not qualify for the standard deduction — but you can deduct actual business expenses.
How the standard deduction works in calculation
The standard deduction is applied after computing gross salary (including all allowances) but before arriving at taxable income. Here is a simplified example for a salaried employee under the new regime:
| Component | Amount |
| Gross salary (CTC minus employer PF/NPS) | ₹14,00,000 |
| Less: Standard deduction | ₹75,000 |
| Less: Employer NPS (if any) | ₹1,00,000 |
| Taxable income | ₹12,25,000 |
At ₹12,25,000 taxable income under the new regime, the raw slab tax is approximately ₹62,500. Marginal relief then caps this at ₹25,000 (₹12,25,000 − ₹12,00,000). After 4% cess: approximately ₹26,000.
Impact: how much tax does ₹75,000 standard deduction save?
The tax saving from the standard deduction depends on your tax slab:
| Taxable income (before std. ded.) | Tax slab | Tax saving from ₹75K deduction |
| ₹4L – ₹8L | 5% | ₹3,750 |
| ₹8L – ₹12L | 10% | ₹7,500 |
| ₹12L – ₹16L | 15% | ₹11,250 |
| ₹16L – ₹20L | 20% | ₹15,000 |
| Above ₹20L | 25–30% | ₹18,750 – ₹22,500 |
For a mid-career professional in the 15–20% slab, the standard deduction saves ₹11,000–15,000 in annual tax.
Standard deduction and the zero-tax threshold
The ₹75,000 standard deduction is what creates the "₹12.75 lakh zero-tax" headline for salaried employees under the new regime.
Here is the math:
- Section 87A rebate covers zero tax for taxable income ≤ ₹12,00,000
- Standard deduction = ₹75,000
- Therefore: gross salary of ₹12,75,000 → taxable income of ₹12,00,000 → zero tax after rebate
This is why the Finance Ministry describes the new regime as offering "zero tax up to ₹12.75 lakh for salaried employees." The actual ₹12L threshold applies to taxable income, not gross salary.
Standard deduction for pensioners
If you are a pensioner receiving a monthly pension from a former employer, you are eligible for the ₹75,000 standard deduction in both regimes. This applies to private sector pensioners and government pensioners alike. The pension is classified as "income from salaries" under the Income Tax Act, which is why the deduction applies.
Family pension (received by a spouse or family member after the pensioner's death) is classified differently and gets a separate deduction — one-third of family pension or ₹25,000, whichever is lower, under Section 57(iia).
Sources
Content on Ek Crore is for educational purposes only. Nothing here is financial advice. Always consult a SEBI-registered advisor, CA, or qualified professional before making investment or tax decisions.