To make income tax filing simpler in India, the government provides a standard deduction of ₹75,000 for salaried individuals and pensioners. This deduction reduces the taxable income, offering significant relief to eligible taxpayers. However, this benefit is not available to everyone.

What is Standard Deduction?

Earlier, salaried individuals used to avail of small allowances like transport allowance and medical reimbursements by maintaining detailed records. These exemptions rarely exceeded ₹50,000 and involved tedious documentation for employees, companies, and the government.

To streamline the process, the government introduced a standard deduction that eliminates the need for multiple smaller claims. A fixed amount is deducted directly from the taxable income, simplifying tax filing for individuals.

For instance:

• If your annual income is ₹13,00,000, the standard deduction of ₹75,000 reduces your taxable income to ₹12,25,000.
• In the New Tax Regime, incomes up to ₹12,75,000 are now tax-free (as per Budget 2025-26).

Who Can Benefit from the Standard Deduction?

The standard deduction is available to:

• Salaried individuals earning a regular income from employment.
• Pensioners, whether they receive pensions from the government or private companies.
• Senior citizens (aged 60 or above) and super senior citizens (aged 80 or above) can also avail of this benefit.

Who Cannot Claim the Standard Deduction?

While this deduction benefits a large section of taxpayers, some individuals are ineligible, such as:

• Self-employed professionals and business owners.
• Individuals earning income solely from interest, rent, or capital gains.
• Companies, firms, or other entities, as this deduction is exclusive to individuals.

Why Does the Government Provide This Benefit?

The government introduced the standard deduction for several reasons:

1. Simplified Tax Filing: It eliminates the need for maintaining detailed records for small exemptions, making the tax filing process more efficient.
2. Reduced Tax Burden: By lowering taxable income, it reduces the amount of tax payable, providing financial relief to individuals.
3. Support for Salaried and Pensioned Individuals: These taxpayers have limited avenues for claiming deductions compared to business owners, making this benefit essential for them.

New Tax Slabs (2025-26)

The government has introduced revised tax slabs under the New Tax Regime:

Conclusion

The standard deduction of ₹75,000 is a government initiative to simplify tax compliance and reduce the financial burden on salaried individuals and pensioners. However, it remains unavailable to self-employed individuals and those earning through non-salaried sources. With the revised tax slabs and increased deductions under the New Tax Regime, taxpayers have more opportunities to save on taxes while filing returns effortlessly.