Tax Relief for Salaried Employees: ₹75,000 Standard Deduction is Now Official
The government has officially cleared up confusion for salaried employees by legally cementing the ₹75,000 standard deduction under the new tax regime. This move, which follows an announcement in the Union Budget 2024, makes the benefit a permanent part of the tax law.
The Change: Your New Standard Deduction is Confirmed
To provide legal clarity, the government passed the Taxation Laws (Amendment) Bill, 2025. This bill amends Section 16 of the Income Tax Act, 1961, and specifies the following:
- Salaried individuals opting for the old tax regime will continue to get a standard deduction of ₹50,000.
- Those choosing the new tax regime will now officially receive a higher standard deduction of ₹75,000.
This amendment is a direct response to Finance Minister Nirmala Sitharaman’s pledge to provide clarity on the new tax regime. The higher deduction has also been incorporated into the New Income Tax Bill 2025, which will come into force from April 1, 2026, ensuring the benefit is here to stay.
Pension Scheme Benefits are Now Legally Equal
In addition to the standard deduction, the amendment bill also provided clarity on the Unified Pension Scheme (UPS). The government has confirmed that the tax benefits for the UPS are now legally on par with those of the National Pension System (NPS).