There were rumours that the government might hike the amount of standard deduction available to give tax relief to the middle class

Has Standard Deduction of Rs 75,000 from salary, pension income increased in Budget 2025? However, hopes of the middle class have been dashed

No hike has been announced in the standard deduction limit by Finance Minister Nirmala Sitharaman in Budget 2025. There were rumours that the government might hike the amount of standard deduction available to give tax relief to the middle class. However, hopes of the middle class have been dashed.

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Standard deduction is a tax break available to salaried individuals and pensioners in the form of a deduction from their salary and pension income, respectively. Even family pensioners can claim a standard deduction from the family pension income received by them.

Also read | Income Tax Slabs Budget 2025 Live Updates

For the upcoming financial year 2025-26, salaried individuals, pensioners and family pensioners will claim a deduction of the same amount as available in the current FY 2024-25.

Available under both tax regimes

Currently, standard deduction is available under the both the tax regimes – old and new. However, the limit of the standard deduction is different under both regimes.

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Till March 31, 2023, standard deduction was available only under the old tax regime. The benefit of standard deduction was introduced in new tax regime in Budget 2023 (effective from April 1, 2023).

Also read | No tax for up to Rs 12.75 lakh income for salaried under new tax regime as Section 87A tax rebate hiked in Budget 2025

Standard deduction available in FY 2025-26

Currently, salaried persons and pensioners can claim a standard deduction of Rs 75,000 from salary and pension income, respectively, under the new tax regime. A family pensioner can avail benefit of Rs 25,000 as standard deduction from his/her family pension under the new tax regime.

The standard deduction amount is different under the old tax regime for salaried persons, pensioners and family pensioners. Under the old tax regime, salaried and pensioners can claim a standard deduction of Rs 50,000 from salary and pension income, respectively. A family pensioner can claim a standard deduction of Rs 15,000 from family pension under the old tax regime. As no change has been announced in the standard deduction limits so the above limits continue to apply for FY2025-26.

When was standard deduction limit last hiked?

The standard deduction was last hiked eight months ago in July Budget 2024 but only in the new tax regime. It was hiked by Rs. 25,000 i.e. from Rs.50,000 to Rs.75,000 under the new tax regime. However, no change has been announced in the standard deduction limit under the old tax regime since the introduction of new tax regime in FY 2020.

Standard deduction was re-introduced in Budget 2018 (effective from April 1, 2018). The deduction was brought back in lieu of transport allowance and medical reimbursement which were removed. The maximum amount of standard deduction available from April 1, 2018, was Rs 40,000. This amount was hiked by Rs.10,000 to Rs.50,000 in interim budget 2019.

Documents required to claim standard deduction

There is no document required to claim standard deduction except proof that it is being claimed as a deduction from salary or pension i.e. proof that there is income from any of these sources. The deduction is a straight deduction, but it is available only from salary, pension income and family pension income. Therefore, those who do not have salary or pension income cannot claim this deduction. For example, a consultant who has only consultancy income, but no pension or salary cannot claim this tax break.

This story originally appeared on: India Times - Author:Faqs of Insurances