Limit of Standard Deduction has been increased from Rs. 50000/- to Rs. 70000/- for AY 2025-26 for those opting New Tax RegimeÂ
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:
| Â | 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/- |
- Penalty for late supply of goods allowable deduction u/s 37 being not a crime or prohibited activity
- Interest received from Cooperative banks allowable deduction u/s 80P to a Cooperative Society
- SC to decide distinction in employees & employer contribution to PF, ESI for allowability u/s 43B
- No liability to collect TCS u/s 206C (1C) from person involved in illegal mining – SC
- Receipts mentioning that it was towards corpus, donation assumed to be for corpus of trust
