Quick answer: Salaried employees and pensioners get a standard deduction of ₹50,000 in the old tax regime and ₹75,000 in the new tax regime — a flat amount deducted from gross salary or pension, no proof required. Family pensioners get a smaller version under Section 57(iia): the lower of ₹15,000 (old regime) / ₹25,000 (new regime) or one-third of the pension. The standard deduction was last revised in Budget 2024 (which raised the new regime cap from ₹50,000 to ₹75,000) and Budget 2025 (which raised the family pension cap from ₹15,000 to ₹25,000 in the new regime). Budget 2026 made no further changes. From 1 April 2026, the deduction is governed by Section 19 of the Income Tax Act, 2025 (replacing Section 16(ia) of the 1961 Act).

Key takeaways

  • Standard deduction is one of the few benefits available in both old and new tax regimes — most others are restricted to the old regime.
  • The ₹25,000 difference between regimes saves ₹7,500 of tax at the 30% slab, ₹5,000 at 20%, ₹2,500 at 10% — useful but rarely decisive.
  • Standard deduction is per-person per-year, not per-employer. Two jobs in a year still yields only one ₹50K or ₹75K total.
  • Pensioners drawing pension from their former employer get the same ₹50K/₹75K under Section 19 (was 16(ia)).
  • Family pensioners (those receiving pension from a deceased relative) claim under Section 57(iia) at a lower limit.

The standard deduction is the closest thing the Indian tax code has to a free gift. No investment required, no proof to submit, no bills to keep, no receipts to chase — just a flat amount that comes off your gross salary before the slab rates apply. ₹50,000 in the old regime, ₹75,000 in the new regime. Salaried employees and pensioners get it automatically, the moment their income is computed.

Behind the gift is a more interesting story. The current standard deduction is the second iteration of a benefit that was first introduced in 1974, abolished in 2005, brought back in 2018, and raised twice since. The asymmetry between the two regimes — ₹50K versus ₹75K — isn''t random generosity. It''s structural compensation for what the new regime takes away. Understanding this is the difference between thinking "the new regime gives me ₹25,000 more in deduction" and seeing "the new regime gives me ₹25,000 more in standard deduction in exchange for losing HRA, LTA, conveyance allowance, medical reimbursement, and most Chapter VI-A deductions."

This article walks through what the standard deduction actually is, the difference between the two regimes and why, who qualifies, the family pension variation, and how to think about the standard deduction when choosing your tax regime. Use Ganak''s Take-home Salary Calculator to model both regimes against your specific salary and exemptions.

What the Standard Deduction Actually Is

The standard deduction is a flat amount automatically deducted from gross salary income before the slab rates apply, intended as a notional allowance for expenses incurred in performing employment duties — transport, professional development, periodicals, and similar. The allowance is "standard" in the sense that everyone who qualifies gets the same amount regardless of actual expenses; you don''t have to show any spending.

Under Section 19 of the Income Tax Act, 2025 (which replaced Section 16(ia) of the 1961 Act on 1 April 2026), the deduction applies to:

  • Salaried employees — regardless of whether the salary is from one employer or multiple
  • Pensioners receiving pension from their former employer — same Section 19 treatment as salary
  • The amount is a fixed sum: ₹50,000 in the old regime, ₹75,000 in the new regime

The deduction is per-person per-year, not per-employer per-year. This is the most common confusion. If you worked at two employers during FY 2025-26 — say, switched jobs in October — you still get only one ₹50,000 or ₹75,000 total, not ₹50,000 from each. Both employers have to coordinate via Form 12B (now Form 124 from FY 2026-27 onwards) so that one employer applies the standard deduction and the other doesn''t double up. If both apply it, your TDS will be lower than your actual liability and you''ll owe self-assessment tax at filing time.

A Brief History (Why the Two Numbers Are Different)

The standard deduction has had three lives. It was introduced in 1974 at modest amounts, raised periodically, and stood at ₹30,000 for salaries above ₹5 lakh just before its abolition in 2005. The 2005 Finance Bill removed it entirely on the argument that the new transport allowance (₹800 per month, later raised) and medical reimbursement (₹15,000 per year) had effectively replaced its function.

For 13 years between 2005 and 2018, India''s salaried employees had no standard deduction. They claimed transport and medical reimbursements separately, with the attendant paperwork — bus tickets, taxi receipts, doctor''s bills — and the reimbursements were quietly more generous than the old standard deduction had been. Some of this changed in Budget 2018, which abolished the transport and medical reimbursements and reintroduced a standard deduction of ₹40,000 in their place. The political framing was "tax relief"; the actual effect was roughly neutral, with a small benefit for those who had previously struggled to claim the reimbursements properly.

Budget 2019 raised the standard deduction to ₹50,000. The new tax regime introduced in 2020 initially did not include standard deduction — that was added in Budget 2023 at ₹50,000, matching the old regime. Budget 2024 raised the new regime''s standard deduction to ₹75,000 while leaving the old regime at ₹50,000, creating the current asymmetry. Budget 2025 raised the family pension deduction cap from ₹15,000 to ₹25,000, again only in the new regime. Budget 2026 made no changes.

The asymmetry isn''t accidental. The new regime, since its inception, has been positioned as a simpler structure with lower slab rates but fewer exemptions and deductions. Standard deduction is the substitute for many of the things you lose — HRA, LTA, transport allowance, medical reimbursement, leave encashment in service. The higher amount in the new regime acknowledges that its standard deduction has more work to do.

Why the New Regime Gets ₹25,000 More

The headline framing — "the new regime gives ₹25,000 more standard deduction" — misses the structural point. The new regime takes away:

  • HRA exemption under Section 12 (was Section 10(13A))
  • LTA exemption
  • Transport allowance for ordinary salaried employees (the differently-abled exemption survives)
  • Most Chapter VI-A deductions (80C, 80D, 80E, 80CCD(1), 80CCD(1B), 80G, 80TTA, etc.)
  • Section 24(b) home loan interest deduction for self-occupied property
  • Professional tax deduction under Section 16(iii)

The trade is rarely worth it on a pure deduction basis. A salaried employee in Mumbai paying ₹40,000 monthly rent on a ₹50,000 monthly basic could claim HRA exemption of roughly ₹3-4 lakh annually. At the 30% slab, that''s ₹90,000-1,20,000 in tax saved. The extra ₹25,000 of standard deduction in the new regime saves ₹7,500. The loss of HRA alone is 10-15× the gain from the higher standard deduction.

What the new regime offers in compensation is the lower slab structure plus the enhanced Section 87A rebate that makes income up to ₹12 lakh effectively tax-free. For taxpayers without significant HRA exposure, without home loan interest, and without large 80C investments, the new regime usually wins despite the smaller exemption set. For taxpayers with all of these, the old regime usually wins despite the smaller standard deduction. The decision turns on individual circumstances, not on the standard deduction differential alone.

Family Pensioners: A Different Section, A Different Limit

This is where many readers get tripped up. The standard deduction we''ve discussed so far applies to salaried employees and to pensioners receiving pension from their former employer. Family pensioners — that is, people receiving pension from the government or an employer because their spouse, parent, or other family member''s pension entitlement passed to them on the family member''s death — are treated under a different section.

Under Section 57(iia) of the Income Tax Act (which continues into the IT Act 2025 framework), family pensioners can deduct the lower of:

  • One-third of the family pension received during the year, OR
  • ₹15,000 in the old tax regime, ₹25,000 in the new tax regime

The "lower of" formulation matters. A family pensioner receiving ₹2 lakh per year of family pension can deduct ₹25,000 in the new regime (which is lower than ₹66,667, one-third of ₹2 lakh). A family pensioner receiving only ₹60,000 per year can deduct only ₹20,000 (which is lower than ₹25,000). The deduction caps at the lower number, not at one-third.

Family pension itself is taxable under "Income from Other Sources," not "Income from Salary," which is why the deduction lives in Section 57 rather than Section 19. The classification matters because family pension is the only income head where the standard deduction is calibrated to the income, not flat. Most other quirks — like the difference between regular pension and family pension treatment — flow from this classification difference.

Who Doesn''t Get the Standard Deduction

The standard deduction applies only to income from salary or pension. Everyone else, no matter how steady their income, doesn''t qualify. This includes:

  • Self-employed professionals — doctors, lawyers, consultants, freelancers, content creators. Even if your income is regular and recurring, if it''s reported under "Profits and Gains of Business or Profession" rather than salary, no standard deduction applies. You can deduct actual business expenses instead, which often produces a much larger benefit.
  • Business owners and partners — same reasoning.
  • Recipients of contractual income outside an employment relationship — payments under Section 194J (professional fees) don''t qualify even if the work resembles employment.
  • Investors with capital gains, interest, rental income, or other passive income — none of these income heads carry a standard deduction equivalent.

The salaried-only nature of the deduction is one reason consultants and contractors are pushed to be careful about whether their income is structured as Section 192 salary income or Section 194J professional income. Salary brings standard deduction, EPF, gratuity entitlement, medical insurance, and other employer-side benefits. Professional fees brings flexibility but loses all of those.

How to Claim It

You don''t. The standard deduction is automatic. Your employer applies it when computing your TDS for each month, and the income tax e-filing portal applies it when you file your ITR. There is no form to submit, no checkbox to tick, no proof to attach. The amount appears as a deduction in your Form 16 Part B (or Form 130 Part C from FY 2026-27 onwards) and flows through to your ITR.

The only situation where you need to be alert is when you change employers mid-year. Both old and new employers must coordinate so that the standard deduction is applied only once across the combined income. Submit Form 12B (or Form 124 from FY 2026-27) to your new employer, disclosing the previous employer''s salary and TDS. The new employer will then exclude the standard deduction from their portion of TDS computation, since the previous employer''s Form 16 already accounts for it. Skip this step and you''ll find yourself owing self-assessment tax at filing time, which the IT department will have already computed by the time your ITR processing completes.

Frequently Asked Questions

Is the standard deduction available in the new tax regime?

Yes. The standard deduction is one of the few benefits available in both old and new tax regimes. Salaried employees and pensioners get ₹50,000 in the old regime and ₹75,000 in the new regime. The deduction is applied automatically — no form, no proof, no checkbox. This is one of the reasons salaried filers earning up to ₹12.75 lakh effectively pay zero tax under the new regime: the ₹75,000 standard deduction shifts the threshold up from ₹12 lakh of taxable income to ₹12.75 lakh of gross salary.

Can I claim standard deduction from each employer if I changed jobs during the year?

No. The standard deduction is per-person per-year, not per-employer per-year. If you worked at two employers during FY 2025-26, your total deduction across both is still ₹50,000 (old regime) or ₹75,000 (new regime). Submit Form 12B (or Form 124 from FY 2026-27 onwards) to your second employer disclosing the previous employer''s salary and TDS so they can exclude the standard deduction from their portion of TDS. If both employers apply it independently, you''ll owe self-assessment tax at filing time.

Do pensioners get the standard deduction?

Yes, but it depends on the type of pension. Pensioners receiving pension from their former employer claim under Section 19 (was 16(ia)) at the same ₹50,000/₹75,000 limits as salaried employees. Family pensioners — those receiving pension from a deceased family member''s entitlement — claim under Section 57(iia) at a different limit: the lower of ₹15,000 (old regime) / ₹25,000 (new regime) or one-third of the family pension. The classification difference exists because family pension is taxed under "Income from Other Sources" rather than "Income from Salary."

Is the ₹75,000 standard deduction better than HRA exemption under the old regime?

Almost never, if you''re actually paying significant rent. A salaried employee paying ₹40,000 monthly rent on a ₹50,000 monthly basic could claim HRA exemption of roughly ₹3-4 lakh annually under the old regime — at the 30% slab, that saves ₹90,000 to ₹1.2 lakh in tax. The extra ₹25,000 of standard deduction in the new regime saves ₹7,500. HRA exemption is 10-15× more valuable if you have significant rent exposure. The new regime wins for taxpayers with low or no rent, modest 80C deductions, and no major home loan interest.

Can self-employed people or freelancers claim standard deduction?

No. The standard deduction is exclusive to income from salary and pension. Self-employed professionals, freelancers, business owners, and consultants whose income is reported under "Profits and Gains of Business or Profession" cannot claim it. They can however deduct actual business expenses — internet, laptop depreciation, office rent, professional development — which often produces a much larger benefit than the flat standard deduction would have.

Did Budget 2026 change the standard deduction?

No. Budget 2026 made no changes to the standard deduction. The current limits (₹50,000 in the old regime, ₹75,000 in the new regime, ₹15,000/₹25,000 for family pension) were last set in Budget 2024 (salary deduction raised to ₹75,000) and Budget 2025 (family pension cap raised to ₹25,000 in new regime). Budget 2027 may revisit the figures, but planning should be based on existing limits.

What is Section 19 of the Income Tax Act, 2025?

Section 19 of the new Income Tax Act, 2025 (effective 1 April 2026) governs the standard deduction for salaried employees and pensioners. It corresponds to Section 16(ia) of the repealed 1961 Act. The substantive rule is identical — ₹50,000 in the old regime, ₹75,000 in the new regime — only the section number has changed. Family pension deduction remains under Section 57(iia) in both Acts.

Sources and Further Reading

This guide is based on Section 16(ia) of the Income Tax Act, 1961 (which applies to FY 2025-26 income filed in AY 2026-27), Section 19 of the Income Tax Act, 2025 (effective 1 April 2026), Section 57(iia) which continues into the new Act, and the Finance Acts of 2024, 2025, and 2026. For official references:

Last verified: 10 May 2026. This article will be updated if Budget 2027 introduces changes to the standard deduction.