Income tax · Individuals and salaried
What is the standard deduction for salaried people and pensioners?
Short answer
Every salaried employee and pensioner gets a flat standard deduction without any proof: ₹75,000 in the new regime and ₹50,000 in the old regime, or the salary itself if lower. Family pension received by a deceased employee's family gets a separate deduction of one-third, up to ₹25,000 in the new regime and ₹15,000 in the old. Under the 2025 Act the standard deduction moves from section 16(ia) to section 19.
The amounts
| New regime | Old regime | |
|---|---|---|
| Standard deduction on salary or pension | ₹75,000 | ₹50,000 |
| Family pension deduction | One-third, up to ₹25,000 | One-third, up to ₹15,000 |
The standard deduction is the lower of these amounts and the salary or pension received. It needs no bills or proof and replaces the old transport and medical allowances.
Who gets it
- Employees with salary from one or more employers. If you change jobs during the year, it is allowed once, not by each employer.
- Pensioners receiving a pension from a former employer: this is taxed as salary, so the standard deduction applies.
- Family pension received by a spouse or child after the employee's death is taxed as "income from other sources", so it gets the separate one-third deduction instead.
Pension from an annuity you bought yourself is not salary and does not get the standard deduction.
How it fits with the ₹12 lakh rebate
In the new regime, salary up to ₹12,75,000 is effectively tax-free: ₹75,000 of standard deduction brings total income to ₹12,00,000, which the rebate covers. See is income up to ₹12 lakh tax-free?.
Other points
- Professional tax paid on salary is deductible in the old regime only.
- Entertainment allowance is deductible only for government employees, in the old regime.
- Senior citizens aged 75 or more with only pension and bank interest from the same bank may not need to file a return at all, if the bank deducts the tax.
Legal basis
- Section 16(ia), Income-tax Act, 1961, now section 19 (Table serial 2), Income-tax Act, 2025
- Section 57(iia), Income-tax Act, 1961 (family pension), and the matching provision of the 2025 Act
Official sources
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