The Finance Minister, Nirmala Sitharaman, did not announce any increase in the standard deduction limit in Budget 2025. There were rumours that the government might increase the standard deduction
Shivani Verma | Feb 3, 2025 |
Budget 2025: Has the Standard Deduction Increased to Rs. 75,000?
The Finance Minister, Nirmala Sitharaman, did not announce any increase in the standard deduction limit in Budget 2025. There were rumours that the government might increase the standard deduction to provide tax relief to the middle class. However, the government did not make any changes, which has disappointed the middle class.
The standard deduction is a tax benefit for salaried individuals and pensioners. It allows them to reduce a fixed amount from their salary or pension income, which helps lower their taxable income. Even family pensioners can claim this standard deduction on the family pension they receive.
In the Financial year 2025-26, salaried persons, pensioners and family pensioners will get the same standard deduction as they did in FY 2024-25.
The standard deduction is available under both the old and new tax regimes, but the limit is different for both tax regimes. Before March 31, 2023, it was only available under the old tax regime. Budget 2023 introduced the standard deduction benefit in the new tax regime as well.
Salaried individuals and pensioners can now claim a standard deduction of Rs. 75,000 from their salary or pension income under the new tax regime. For those receiving a family pension, the standard deduction is Rs. 25,000 under the new tax regime.
The amount of standard deduction is different under the old tax regime for pensioners, salaried persons and family pensioners. Salaried persons can claim the standard deduction under the old tax regime is Rs. 50,000 from salary and pension income. On the other hand, a family pensioner may claim a deduction of Rs. 15000 under the old tax regime from the family pension. There is no change in the standard deduction limits, so the existing limits will continue for FY 2025-26.
The standard deduction was last increased eight months ago in the July Budget 2024, but only for the new tax regime. It was increased by Rs. 25,000, from Rs. 50,000 to Rs. 75,000. However, there has been no change in the standard deduction for the old tax regime since the new tax regime was introduced in FY 2020.
The standard deduction was reintroduced in Budget 2018, starting from April 1, 2018. It replaced the transport allowance and medical reimbursement, which were removed. The maximum standard deduction was Rs. 40,000. Later, in the interim budget of 2019, it was increased by Rs. 10,000, making it Rs. 50,000.
Necessary Documentation to claim standard deduction
To claim the standard deduction there is no need to submit any special documents. The only proof required is that you have income from salary or pension. It is a straight deduction, but it only applies to salary, pension, or family pension income. If you don’t have income from any of these sources, you can not claim this deduction.
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