Standard Deduction: The ₹50,000 That Slips Out Unnoticed
One of the simplest tax breaks for salaried employees is also one of the most overlooked: the standard deduction. It is applied automatically to your salary income — no investment, no paperwork, no proof required. Yet many people don't realise how much it actually reduces their tax.
In this article
What the standard deduction is
Introduced to replace transport allowance and medical reimbursement (and to cover those expenses), the standard deduction is a flat amount subtracted from your gross salary before computing tax. It applies to salaried employees and pensioners. It does not require any actual expenditure — it is available to everyone in these categories.
How much you get
| Regime | Standard deduction |
|---|---|
| Old regime | ₹50,000 |
| New regime (AY 2025-26) | ₹75,000 |
The higher ₹75,000 deduction in the new regime is one of the reasons the new regime's ₹7,00,000 rebate threshold effectively becomes ₹7,75,000 for salaried employees — you can earn up to ₹7,75,000 and pay zero tax.
Worked example
Suppose your gross salary is ₹12,00,000 and you choose the old regime:
| Step | Amount (₹) |
|---|---|
| Gross salary | 12,00,000 |
| Less: Standard deduction | − 50,000 |
| Less: Other deductions (80C, HRA, etc.) | − 2,00,000 |
| Taxable income | 9,50,000 |
At the 30% slab the ₹50,000 deduction saves you about ₹15,000 in tax — without lifting a finger.
Important notes
- The standard deduction is not an expense claim — you get it even if you spend nothing on transport or medical care.
- It is included in your Form 16 automatically; you usually don't need to claim it separately.
- Pensioners also benefit from the standard deduction.
- You can claim it under either regime — old gives ₹50,000, new gives ₹75,000. For many employees this alone tips the balance toward the new regime.
Related: Combine the standard deduction with your other options using the regime flowchart.