budget 2025: What standard deduction really is & how it impacts salaried class, pensioners

With each eyes connected Finance Minister Nirmala Sitharaman's eighth Budget speech, owed astatine 11 americium connected Saturday, February 1, it is an apt clip to larn astir immoderate of the cardinal concepts wrong the satellite of income tax. A modular deduction is simply a fixed magnitude of wealth automatically deducted from a salaried idiosyncratic oregon pensioner's yearly taxable income, thereby reducing their income taxation liability. Read connected to larn astir this income taxation deduction for the salaried and pensioners successful detail. 

Standard Deduction Under Old Income Tax Regime 

Currently, a modular deduction of Rs 50,000 is disposable to eligible income taxation assessees—individuals earning salaries and receiving pensions—under the aged income taxation regime. 

Standard Deduction Under New Income Tax Regime 

At the aforesaid time, a modular deduction of Rs 75,000 is disposable to eligible income taxation assessees nether the caller income taxation regime.

It is worthy noting that earlier changes announced successful Budget 2024-25, announced successful July 2024, this modular deduction was astatine Rs 50,000. 

It was successful the archetypal Budget of the Narendra Modi 3.0 authorities that the modular deduction was accrued by 50 per cent to Rs 75,000.  

The summation successful modular deduction was aimed astatine providing immoderate alleviation to income taxation payees. 

Many taxation experts judge that the announcement was besides aimed astatine boosting the entreaty of the caller regime. 

Standard Deduction Examples

New vs Old Income Tax Regime 

In lawsuit an individual's gross yearly wage is Rs 10 lakh (before deductions), applying the modular deduction volition trim the taxable income by Rs 75,000 nether the caller authorities and by Rs 50,000 nether the aged regime, barring different deductions.  

History of Standard Deduction

The Modi medication reintroduced modular deduction, which was abolished successful 2005, successful 2018 successful spot of transport and aesculapian allowances.

A modular deduction of Rs 40,000 was announced successful 2018. 

Who tin avail the modular deduction?

The modular deduction is disposable to salaried individuals and retired assessees receiving pension.

It does not use to income taxation assessees who record their returns arsenic Hindu Undivided Families (HUFs).

Documents Needed to Avail Standard Deduction

Under existent taxation laws, determination is nary request to taxable immoderate papers to assertion the modular deduction nether the caller arsenic good arsenic aged taxation regimes arsenic agelong arsenic the assessee meets the basal request of being a salaried idiosyncratic oregon a retiree receiving a pension.

However, it is mandatory to nutrient the receipt of wage oregon pension (whichever is applicable) successful bid to payment from this income taxation deduction.