To simplify the income tax in India, the facility of standard deduction has been provided. Salaried persons and pensioners get a rebate of Rs 75,000. That means Rs 75,000 is rebated from the total taxable income. But why?
Standard Deduction: Paying income tax in India has been quite complicated and difficult, especially under the old tax regime. But the current government has tried to make many improvements in the direction of making it easier. The most special arrangement is the New Tax Regime. Earlier, the government had given a special kind of exemption for both old and new regimes, which is called Standard Deduction. This is a facility that reduces your taxable income by deducting a certain amount from your income. Currently, it is Rs 75,000 in the new tax regime, while it is Rs 50,000 in the old tax regime. But this facility is not for every taxpayer. For whom is it and for whom not? Let’s know.
First of all, let us tell you what is standard deduction. Earlier, salaried people used to take advantage of small exemptions like transport allowance and medical reimbursement. They had to give an account of everything. This amount was less than Rs 50,000. It was difficult for the employees, the company and the government to maintain small accounts. In such a situation, the government has removed all of them and started the facility of a single standard deduction. Under this, an amount has been fixed, which is deducted from the taxable income.
This means that if your annual income is Rs 13 lakh and standard deduction is Rs 75,000, then your taxable income will be Rs 12.25 lakh. In Budget 2025-26, Nirmala Sitharaman has made income up to Rs 12.75 lakh tax free. This facility is under the new tax regime, not the old tax system. This time the new tax slabs have also changed in the budget. Now there are a total of 6 tax slabs-
| Income Tax Slab | Tax Rate |
| Up to ₹ 4,00,000 | NIL |
| ₹ 4,00,001 – ₹ 8,00,000 | 5% |
| ₹ 8,00,001 – ₹ 12,00,000 | 10% |
| ₹ 12,00,001 – ₹ 16,00,000 | 15% |
| ₹ 16,00,001 – ₹ 20,00,000 | 20% |
| ₹ 20,00,001 – ₹ 24,00,000 | 25% |
| Above ₹ 24,00,000 | 30% |
Who can avail this facility?
This facility is mainly for salaried people and pensioners. If you work in a company and get salary, then you can avail this facility. Apart from this, if you get pension, whether it is government pension or private company pension, then you can also avail this facility. Senior citizens (above 60 years of age) and very senior citizens (above 80 years of age) also get the benefit of this facility.
Who cannot avail this facility?
Although this facility is beneficial for many people, there are some people who cannot avail it. If you are self-employed or run your own business, then you cannot avail this facility. Apart from this, if your income is only from interest, rent, or capital gains, then also you cannot avail this facility. Companies, firms, and other organizations also cannot avail this facility.
Why does the government provide this facility?
The government provides this standard deduction for several reasons. First, it simplifies tax filing. Earlier, people had to submit many documents to avail small exemptions, but now standard deduction has made it easier. Second, it reduces the tax burden of people. When your taxable income is less, your tax also reduces. Third, this facility provides relief to salaried people and pensioners, as they have limited options to show the expenses incurred to earn income.
