The Income Tax Act, 1961, allows you to claim a standard deduction in income tax and rebates. This benefits salaried individuals as well as senior citizens. This is because it helps lower your net taxable income and tax liability.
Read on to learn what income tax standard deduction is, how it is calculated, and more.
According to the Indian taxation system, salaried employees and senior citizens can claim deductions of ₹50,000 on their salary and pension amount. In the financial year 2018-19, the maximum deduction amount was ₹40,000.
However, from FY 2019-2020 onwards, the maximum deduction amount was increased to ₹50,000. You can claim this tax benefit irrespective of the amount that you spend on transport or medical allowance.
The purpose of the standard deduction is to provide relief to salaried individuals belonging to the middle class and simplify the tax filing process.
If you are a salaried individual, you can claim an income tax standard deduction of ₹50,000 from your gross salary. To understand the deduction in a better way, check out this table.
Particulars |
Amount |
Gross Salary |
₹9,00,000 |
Transport Allowance (non-taxable) |
₹0 |
Medical Allowance (non-taxable) |
₹0 |
Standard Deduction |
₹50,000 |
Net Taxable Income |
₹8,50,000 |
Senior citizens receive a pension, which is taxable under the ‘Income from Salary’ head. While actual salaries get a standard deduction of ₹50,000, it is different for senior citizens.
Under Section 16, the standard deduction for senior citizens is either ₹50,000 or the amount of pension in a financial year, whichever is less.
The calculation of standard deduction in income tax is as per the stipulations and amendments.
Here is an example of how standard deduction has progressed:
Particulars |
FY 2022-23 (Old Regime) |
FY 2022-23 (New Regime) |
FY 2023-24 (New Regime) |
Basic Salary + Dearness Allowance |
₹10,00,000 |
₹10,00,000 |
₹10,00,000 |
Travel Allowance (non-taxable) |
₹0 |
₹0 |
₹0 |
Medical Allowance (non-taxable) |
₹0 |
₹0 |
₹0 |
Other Taxable Allowance |
₹1,50,000 |
₹1,50,000 |
₹1,50,000 |
Gross Salary |
₹8,50,000 |
₹8,50,000 |
₹8,50,000 |
Standard Deduction |
₹50,000 |
₹0 |
₹50,000 |
Total Income |
₹8,00,000 |
₹8,50,000 |
₹8,00,000 |
Other Deductions |
₹1,00,000 |
₹0 |
₹0 |
Income Chargeable to Tax |
₹7,00,000 |
₹8,50,000 |
₹8,00,000 |
You can claim income tax standard deduction while filing your tax return. Generally, employers consider your standard deduction while calculating your payable tax. This calculation helps your employer to deduct your Tax Deducted at Source (TDS).
You need to file the ITR before the due date announced by the Income Tax Department. In case there are any extensions on the last date to file the ITR, the IT department will notify about the same.
Check out other deductions that salaried individuals can benefit from.
Section 80C
Section 80C of the Income Tax Act offers a maximum deduction of ₹1.50 Lakhs on investments. In addition, Section 80CCC offers a deduction for an annuity plan of LIC or other insurance companies.
Section 80D
Under Section 80D, you can claim a deduction of ₹25,000 on insurance for yourself, spouse, and dependent children. Also, an additional deduction of ₹25,000 is available for parents’ insurance if they are below 60 years and ₹50,000 if they are above 60 years.
Section 80E
Section 80E allows you to claim deductions on interest that you pay during the repayment of education loans for higher studies. This deduction is applicable whether you availed the loan for your spouse, children, or a student for whom you are a legal guardian.
Here are other deductions for senior citizens or pensioners.
Section 80D
According to Section 80D, senior citizens can avail of ₹50,000 on the payments of health insurance premiums.
Section 80TTB
Section 80TTB offers a deduction of up to ₹50,000 for senior citizens on interest from bank accounts and deposits, post office deposits, and deposits with NBFCs.
Section 80DDB
Section 80DDB allows a deduction of up to ₹1 Lakh for senior citizens for medical treatment. These include some specific ailments and diseases.
With this information in hand, you can claim standard deduction income tax and other deductions to save on taxes.
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FAQs on Standard Deduction in Income Tax
Can pensioners benefit from standard deduction?
Yes, pensioners can also benefit from the standard deduction in income tax of ₹50,000 in a financial year.
Can I claim section 80C deductions along with standard deduction?
Yes, you can claim the standard deduction in income tax along with section 80C deductions.
Can I claim medical and transport allowance along with the standard deduction?
No, you cannot claim transport and medical allowance. You can only claim the standard deduction of ₹50,000.
Am I allowed to claim deductions of ₹50,000 for returns before FY 2019-20 as well?
No, the ₹50,000 standard deduction is applicable for the FY 2019-20 and succeeding years. You are not allowed to revise your ITR and claim the deduction.
Is the standard deduction ₹40,000 or ₹50,000?
Currently, the standard deduction in India is ₹50,000. It is deducted from your taxable income if you are a salaried employee or a pensioner, irrespective of your total earnings.
What is standard deduction on payslip?
Under the provisions of the Income Tax Act, 1961, you get a standard deduction of ₹50,000. It is deducted from your total taxable income while you file your tax return.
What is the minimum salary for standard deduction?
You can claim the standard deduction irrespective of your salary amount.
Do I need to submit any paperwork to claim a standard deduction?
No, if you are a salaried employee, you do not need to provide proof to claim the standard deduction.
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