Standard Deduction

The standard deduction is a flat amount subtracted from your salary or pension income. It needs no bills or proof, and it directly lowers your taxable salary.

What it is

The standard deduction is a fixed deduction that the law allows against salary or pension income without asking for any documentation. Unlike most other deductions, you do not have to keep receipts or submit proof — it is applied as a flat figure. For AY 2026-27 (FY 2025-26) the amount is ₹75,000 under the New regime and ₹50,000 under the Old regime. It is one of the few deductions that the New regime still permits.

Why it matters

Because it is subtracted from your salary, the standard deduction lowers the figure that flows into your taxable income, and therefore the tax you owe. You will usually see it already accounted for on your Form 16. For salaried people choosing between regimes, the larger ₹75,000 figure under the New regime is one factor that makes that regime attractive even though it disallows allowances like HRA exemption.

Example Illustrative

Suppose your gross salary for the year is ₹12,00,000 and you are on the New regime for AY 2026-27. The standard deduction of ₹75,000 brings the salary considered for tax down to ₹11,25,000 before other adjustments. On the Old regime the same salary would reduce by ₹50,000 instead. Figures are illustrative only.