Key Takeaway: The Finance Ministry has officially raised the standard deduction for salaried individuals and pensioners under the New Tax Regime from ₹50,000 to ₹75,000. This revision reduces the net taxable income of over 40 million taxpayers, yielding direct savings of up to ₹7,500 depending on their tax slab.
In a move to increase disposable income for middle-income taxpayers, the government has announced a revised standard deduction limit in the national budget. The standard deduction, which is a flat amount subtracted from gross salary before tax calculations, now stands at ₹75,000 for the current financial year.
Who Gains the Most?
The revised limit is applicable specifically to taxpayers opting for the New Tax Regime. By combining this with the revised tax slabs and the Section 87A rebate, individuals earning up to ₹7.75 Lakhs will now pay zero income tax.
How the Savings Accumulate
| Gross Annual Salary | Old Standard Deduction | New Standard Deduction | Estimated Tax Savings |
|---|---|---|---|
| ₹8,00,000 | ₹50,000 | ₹75,000 | ₹2,500 |
| ₹12,00,000 | ₹50,000 | ₹75,000 | ₹3,750 |
| ₹15,00,000+ | ₹50,000 | ₹75,000 | ₹7,500 |
Tax experts recommend utilizing these tax savings to increase your Systematic Investment Plan (SIP) contributions, directing the surplus toward long-term equity growth.
