If you are a salaried employee in India, the government automatically reduces your taxable income every year before calculating your tax. This is called the standard deduction, and in FY 2026-27 it is worth Rs. 75,000 under the new tax regime. You do not need to invest anything, submit any proof, or fill any form. It applies to every salaried person automatically.
What Is the Standard Deduction?
The standard deduction is a flat amount subtracted from your gross salary before income tax is calculated. The government treats it as an automatic allowance for work-related expenses -- commute, professional development, equipment -- without asking you to prove any of it.
For FY 2026-27:
Regime | Standard Deduction |
New Tax Regime | Rs. 75,000 |
Old Tax Regime | Rs. 50,000 |
Both regimes give you this deduction automatically. No paperwork needed in either case.
Is Standard Deduction Available in the New Tax Regime?
Yes. This is the most common source of confusion. Standard deduction is available in both the new and old tax regime for FY 2026-27. It was extended to the new regime starting FY 2024-25 and continues at Rs. 75,000 in FY 2026-27.
The new regime gives you Rs. 75,000 -- Rs. 25,000 more than the old regime's Rs. 50,000.
What Changed Between FY 2025-26 and FY 2026-27?
The standard deduction under the new tax regime was increased from Rs. 50,000 to Rs. 75,000 starting FY 2025-26, announced in Budget 2024. For FY 2026-27 it remains at Rs. 75,000 -- no further increase was announced in Budget 2025.
Under the old regime, the standard deduction has been Rs. 50,000 since FY 2019-20 and has not changed.
If you are searching for "standard deduction FY 2025-26" -- the answer is the same: Rs. 75,000 under the new regime, Rs. 50,000 under the old regime. Both years have the same amounts.
How Much Tax Does the Standard Deduction Actually Save?
The saving depends on which tax slab your income falls in. Here is the exact tax saved at different income levels under the new regime:
Gross Salary | Taxable Income After Deduction | Tax Without Deduction | Tax With Deduction | Tax Saved |
Rs. 8,00,000 | Rs. 7,25,000 | Rs. 20,800 | Rs. 0 | Rs. 20,800 |
Rs. 10,00,000 | Rs. 9,25,000 | Rs. 33,800 | Rs. 0 | Rs. 33,800 |
Rs. 12,75,000 | Rs. 12,00,000 | Rs. 46,800 | Rs. 20,800 | Rs. 26,000 |
Rs. 15,00,000 | Rs. 14,25,000 | Rs. 1,09,200 | Rs. 93,600 | Rs. 15,600 |
Rs. 20,00,000 | Rs. 19,25,000 | Rs. 2,16,840 | Rs. 1,93,440 | Rs. 23,400 |
The higher your income, the more the deduction saves in absolute rupees because it is applied at a higher slab rate.
To see your exact tax saving based on your actual CTC, use the CTC to In-Hand Calculator which calculates both regimes side by side.
The Rs. 12.75 Lakh Zero-Tax Threshold Explained Correctly
This is the most misunderstood part of the new regime.
Under the New Tax Regime FY 2026-27, the Section 87A rebate applies when your taxable income is Rs. 12 lakh or below. The rebate amount is up to Rs. 60,000.
Because of the standard deduction, a salaried employee with a gross salary of Rs. 12,75,000 has taxable income of Rs. 12,00,000 after the Rs. 75,000 deduction. At Rs. 12 lakh taxable income, the computed tax is Rs. 80,000 and the 87A rebate covers Rs. 60,000 -- leaving Rs. 20,000 net tax plus 4% cess = Rs. 20,800 total.
The commonly cited "zero tax up to Rs. 12.75 lakh" is not accurate. At Rs. 12.75 lakh gross salary you pay Rs. 20,800 in tax. True zero-tax under the new regime applies when your gross salary is Rs. 12 lakh or below.
New Regime vs Old Regime: Which Benefits More From Standard Deduction?
The deduction amount differs between regimes but the more important difference is what else you can claim:
New Regime | Old Regime | |
Standard Deduction | Rs. 75,000 | Rs. 50,000 |
80C deductions | Not allowed | Up to Rs. 1.5 lakh |
HRA exemption | Not allowed | Allowed |
80D health insurance | Not allowed | Up to Rs. 25,000 |
Home loan interest | Not allowed | Up to Rs. 2 lakh |
In the new regime, the standard deduction is one of the very few deductions available so it carries significant weight. In the old regime, it is one of many. For a full comparison of which regime saves more money at your CTC, read the New vs Old Tax Regime guide for FY 2026-27.
Does Standard Deduction Apply to Pensioners?
Yes. Salaried retirees receiving pension from their employer get the full Rs. 75,000 standard deduction. Family pensioners (receiving pension after the employee's death) get a standard deduction of Rs. 15,000 or one-third of pension, whichever is lower.
How It Appears on Your Salary Slip and Form 16
Your salary slip does not show the standard deduction as a line item. It is applied at the time of tax computation, not at the payroll level.
On your Form 16 you will see it listed under Part B as "Standard Deduction u/s 16(ia)" with the amount Rs. 75,000. This confirms the deduction was applied when computing your TDS for the year.
If you are filing your ITR yourself, select your regime and the standard deduction will be pre-populated automatically under the salary schedule.
Who Gets the Standard Deduction?
Every salaried employee in India gets it automatically. It applies to all private sector salaried employees, government employees, and pensioners. Freelancers, consultants, and those with business or professional income do not get the standard deduction.
Frequently Asked Questions
What is the standard deduction for salaried employees in FY 2026-27?
The standard deduction for salaried employees in FY 2026-27 is Rs. 75,000 under the new tax regime and Rs. 50,000 under the old tax regime. It is applied automatically to every salaried employee with no paperwork or investment required.
Is standard deduction Rs. 75,000 or Rs. 50,000 in FY 2026-27?
It depends on which regime you are under. Under the new tax regime the standard deduction is Rs. 75,000. Under the old tax regime it is Rs. 50,000. The Rs. 75,000 amount was introduced in the new regime from FY 2024-25 and continues unchanged in FY 2026-27.
Is standard deduction available in the new tax regime?
Yes. Standard deduction of Rs. 75,000 is available under the new tax regime for FY 2026-27. It was extended to the new regime starting FY 2024-25. All salaried employees under the new regime get this deduction automatically.
What is the standard deduction under Section 16(ia)?
Section 16(ia) of the Income Tax Act provides the standard deduction to salaried employees. For FY 2026-27 it is Rs. 75,000 under the new regime and Rs. 50,000 under the old regime. You will see it listed as "Standard Deduction u/s 16(ia)" in Part B of your Form 16.
Does standard deduction apply to the old tax regime in FY 2026-27?
Yes. The standard deduction of Rs. 50,000 is available under the old tax regime in FY 2026-27. Under the old regime you also get additional deductions like 80C, HRA exemption, and home loan interest on top of the standard deduction.
How much tax does the standard deduction save?
The tax saving depends on your income slab. At Rs. 10 lakh gross salary under the new regime the Rs. 75,000 deduction saves approximately Rs. 33,800 by pushing taxable income below the 87A rebate threshold. At Rs. 15 lakh it saves Rs. 15,600. At Rs. 20 lakh it saves Rs. 23,400.
Is standard deduction automatic or do I need to claim it?
It is automatic. Your employer applies it when calculating your TDS every month. You do not need to declare it, submit proof, or make any investment. It is pre-populated in your ITR when you file and shown in Form 16 under Part B.
What is the standard deduction for FY 2025-26?
The standard deduction for FY 2025-26 is Rs. 75,000 under the new tax regime and Rs. 50,000 under the old tax regime -- exactly the same as FY 2026-27. The Rs. 75,000 amount was introduced from FY 2024-25 onwards.
Use the CTC to In-Hand Calculator to see your complete salary breakdown including exactly how the standard deduction affects your monthly take-home. You can also use the In-Hand to CTC Reverse Calculator if you want to find out what CTC you need to hit a target monthly amount.
