Limit of Standard Deduction has been increased from Rs. 50000/- to Rs. 70000/- for AY 2025-26 for those opting New Tax Regime
Union Budget 2024-25 has proposed to increase the limit of Standard Deduction from existing Rs. 50000/- to Rs. 70000/- for AY 2025-26 for those salaried taxpayers opting New Tax Regime.
Under Section 16 of the Income tax Act 1961 a flat deduction called “Standard Deduction” is provided from income from salaries. It is to be noted that under New Tax Regime most of the deductions are not allowed but the Standard Deduction is allowable.
In view of the proposed amendment, the amount of Standard Deduction available for AY 2025-26 and AY 2024-25 shall be as under:
| New Tax Regime | Old Tax Regime | |
| AY 2025-26 | Rs. 70,000/- or the amount of salary whichever is less | Rs. 50,000/- or the amount of salary whichever is less |
| AY 2024-25 | Rs. 50,000/- or the amount of salary whichever is less | Rs. 50,000/- or the amount of salary whichever is less |
The illustration of the impact for AY 2025-26 of increased Standard Deduction, Change in Tax Structure in New Tax Regime coupled with section 87A rebate shall be as under:
| Gross Salary income | Tax AY 2025-26 | Tax AY 2024-25 |
| 7,50,000 | Nil | Nil |
| 7,70,000 | Nil | 20,800/- |
| 8,00,000 | 23,920/- | 31,200/- |
| 10,00,000 | 44,720/- | 54,600/- |
| 12,00,000 | 72,280/- | 85,800/- |
- Capital Gain Tax on sale of Shares/Mutual Funds Units increased. Indexing abolished
- CIT(A) empowered to remand best judgment cases back to AO for fresh assessment
- Time limit of six years to file TDS/TCS correction statement w.e.f. 01.04.2025
- Standard Deduction Limit increased to Rs. 70000/- for AY 2025-26 under New Tax Regime
- Income Tax basic exemption limit and tax slabs for individuals & HUFs for AY 2025-26
