TaxSaral

Section 19 · was Section 16(ia) in the 1961 Act

Standard Deduction from Salary

A flat deduction from salary income — ₹75,000 under the default regime, ₹50,000 under the optional regime. No receipts needed; applied automatically by your employer.

Who it applies to: All salaried individuals and pensioners. Pensioners also get this deduction from pension income.

Key points

  • No documents, no proof required — it is a flat deduction applied automatically.
  • Default regime: ₹75,000. Optional (old) regime: ₹50,000.
  • Pensioners can claim standard deduction from their pension income.
  • Cannot be claimed on perquisites or allowances — only on salary/pension.

Worked examples

1. Comparing standard deduction under both regimes

Sunita earns ₹10,00,000 gross salary. How does standard deduction affect her taxable income under each regime?

Default regime:
  Gross salary:          ₹10,00,000
  Standard deduction:   – ₹75,000
  Taxable income:        ₹9,25,000

Optional regime:
  Gross salary:          ₹10,00,000
  Standard deduction:   – ₹50,000
  Taxable income:        ₹9,50,000 (before other deductions like 80C)

Result: Sunita saves ₹75,000 of taxable income under the default regime vs ₹50,000 under the optional regime. The default regime gives an extra ₹25,000 deduction — worth ₹2,500–₹7,500 in tax savings depending on her slab.

2. Pensioner claiming standard deduction

Retired Krishnamurthy receives ₹6L annual pension from his former employer. He has no other income.

Pension income:        ₹6,00,000
Standard deduction:  – ₹75,000 (default regime)
Taxable income:        ₹5,25,000

Tax under default regime:
  ₹0–4L: Nil
  ₹4L–5.25L: 5% × ₹1,25,000 = ₹6,250
Total tax before cess: ₹6,250

Result: Without the standard deduction, taxable income would be ₹6L and tax would be ₹10,000 (5% on ₹2L). Standard deduction saves him ₹3,750 in tax.

Related sections

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Section references are based on the Income Tax Act 2025 (Tax Year 2026-27). Examples are illustrative; verify with a Chartered Accountant before filing.