Salaried taxpayers and pensioners choosing the new tax regime can claim a standard deduction of Rs 75,000 from the financial year 2026-27, increasing the slice of income kept out of the tax net.
What it means
The standard deduction is applied automatically to salary or pension income, with no need to submit proofs. At Rs 75,000, it raises the effective tax-free threshold under the new regime and reduces taxable income for most salaried individuals.
New vs old regime
The new regime offers lower headline slab rates but fewer exemptions, while the old regime allows a wider set of deductions such as those under Section 80C and HRA. The right choice depends on how many deductions a taxpayer claims; those with limited deductions typically benefit more from the new regime.
Taxpayers should run both calculations before deciding, since the choice can be made each year.
Sources: BankBazaar, Upstox, Business Today.