Standard deduction for salaried employees in FY 2026-27
The standard deduction is a flat amount removed from salary income before tax, with no proof required: ₹75,000 under the new regime and ₹50,000 under the old regime in FY 2026-27. It applies to every salaried person and pensioner automatically.
FY 2026-27 figures, rules verified 3 Sep 2026. Numbers assume basic at 40% of CTC, employer PF inside CTC and ₹2,400 professional tax unless stated.
The deduction replaced the old transport allowance and medical reimbursement exemptions in 2018. It was raised to ₹75,000 for the new regime in Budget 2024 and is unchanged for FY 2026-27.
Combined with the section 87A rebate, the ₹75,000 standard deduction means a salary of ₹12,75,000 pays zero income tax under the new regime, since taxable income lands exactly at the ₹12,00,000 rebate cap.
The deduction is applied by your employer when computing TDS, so you do not need to claim it separately in your return.
See the figure for your own salary on the in hand calculator.
Questions
Related terms
- Section 87A rebate — The section 87A rebate cancels income tax of up to ₹60,000 for anyone whose taxable income is ₹12,00,000 or less under the new regime in FY 2026-27.
- TDS on salary — TDS on salary is the income tax your employer deducts under section 192 each month, computed by estimating your tax for the whole year and spreading it across the remaining months.
- Marginal relief — Marginal relief limits the extra tax to the extra income when taxable income crosses a threshold, so earning ₹10,000 above the ₹12 lakh rebate cap costs at most ₹10,000 of tax instead of the full slab tax of about ₹61,500.