Simplicity is bliss, especially in taxation. Standard Deduction is a flat deduction allowed to salaried individuals without the need to submit any bills or proofs.
What is Standard Deduction?
It is a fixed amount deducted from your gross salary before calculating the taxable income. For FY 2025-26, the standard deduction limit is ₹50,000.
Who Can Claim?
1. Salaried Employees: All employees receiving a salary.
2. Pensioners: Individuals receiving a pension from their former employer.
No Proofs Needed
Unlike HRA or LTA where bills are required, Standard Deduction is automatically applied. You don't need to submit any medical or transport bills to claim this.
Replaced Allowances
Standard Deduction was reintroduced in Budget 2018 to replace the earlier Medical Allowance (₹15,000) and Transport Allowance (₹19,200). It simplifies the tax filing process significantly.
New vs Old Regime
Initially, Standard Deduction was available only in the Old Tax Regime. However, recent budget updates have extended the benefit of Standard Deduction to the New Tax Regime as well for salaried individuals, making the new regime more attractive.
Conclusion
Standard Deduction provides a basic relief to all salaried class taxpayers. It lowers your taxable income directly, thereby reducing your tax liability with zero paperwork.