Rs 75,000 Standard Deduction For Salaried Taxpayers Explained Under New Tax Regime

So far we know that the standard deduction plays a crucial role in calculating tax-free income for salaried individuals. 

Clarification On Rs 75,000 Standard Deduction in New Tax Regime

This was initially set at Rs 50,000, but later on the deduction was enhanced to Rs 75,000 for those opting for the new tax regime through a provision introduced in the Finance (No. 2) Act, 2024.

For doing so, they have added a new proviso to Section 16(ia).

Earlier, the Indian Government has introduced amendments to the Income Tax Act, 1961 which was mainly aimed at clarifying the standard deduction of Rs 75,000.

The government has made it available under the new tax regime for salaried employees. 

They have also formally incorporated this clarification into the New Income Tax Bill, 2025. 

It appears that the standard deduction plays a crucial role in calculating tax-free income for salaried individuals. 

In this regard, the Finance Minister Nirmala Sitharaman written, “In addition to the New Income Tax Bill, we are making certain amendments to the Income Tax Act of 1961… bringing clarity to the new Income Tax regime, where the standard deduction of ₹75,000 will apply for salaried individuals,” in a X post.

As we know, the Rs 75,000 standard deduction for salaried taxpayers under the new tax regime had already been announced during the Union Budget 2024.

So, What Changes Now?

With this Taxation Laws (Amendment) Bill, 2025, the Government has explicitly clarified that taxable income under the head “Salaries” will be calculated after applying a standard deduction of ₹50,000 under the old tax regime and Rs 75,000 under the new tax regime.

This amendment specifies, “The income chargeable under the head ‘Salaries’ shall be computed after making the following deductions.

(ia) a deduction of fifty thousand rupees or the amount of the salary, whichever is less.

Provided that in a case where income-tax is computed under clause (ii) of sub-section (1A) of section 115BAC, the provisions of this clause shall have effect as if for the words ‘fifty thousand rupees’, the words ‘seventy-five thousand rupees’ had been substituted.”

They further informed that this updated provision has also already been integrated into the New Income Tax Bill, 2025.

These changes will be applicable from April 1, 2026, corresponding to the financial year 2026–27 reportedly.

This latest update holds significance as by  addressing the standard deduction, the Taxation Laws (Amendment) Bill also resolves ambiguity regarding deductions related to the Unified Pension Scheme (UPS). 

With this amendment, they ensure that tax benefits available for contributions to the UPS are on par with those for the National Pension System (NPS) as this would bring both retirement savings schemes under the same tax treatment framework.

For the unawares, these two Taxation Laws (Amendment) Bill, 2025, and the New Income Tax Bill, 2025, have been approved by Parliament, all prepared for their implementation in the coming financial year.

What Are The Revised Tax Slabs?

It is noteworthy here that the New Income Tax Bill, 2025, specifies the revised tax slabs and rates applicable to income up to ₹12 lakh and beyond.

Moving ahead, this new tax regime rates apply to individuals, Hindu Undivided Families (HUFs), and certain other entities under Clause 202(I) of the Bill.

As per this bill, the tax structure is given below.

Notably, these rates will be applicable to Individuals, Hindu Undivided Families (HUFs), Associations of Persons (excluding co-operative societies), Bodies of Individuals, whether incorporated or not a d Artificial juridical persons.

What About The Old Tax Regime?

It appears that the new Income Tax Bill does not explicitly list the tax slabs and rates for taxpayers, as these are subject to change through the annual Finance Bill presented during the Union Budget.

Let’s go through the present slab rates which are applicable under the old tax regime.

General Citizens

Up to Rs 2,50,000 – Nil

Rs 2,50,001 to Rs 5,00,000 – 5%

Rs 5,00,001 to Rs 10,00,000 – 20%

Above Rs 10,00,000 – 30%

Senior Citizens (Aged 60 to under 80 years)

Up to Rs3,00,000 – Nil

Rs 3,0 001 to Rs 5,00,000 – 5%

Rs 5,00,001 to Rs 10,00,000 – 20%

Above Rs 10,00,000 – 30%

Super Senior Citizens (Aged 80 years and above)

Up to Rs 5,00,000 – Nil

Rs 5,00,001 to Rs10,00,000 – 20%

Above Rs 10,00,000 – 30%