The Income Tax Act, 1961, allows you to claim a standard deduction in income tax and rebates. This benefits salaried individuals as well as senior citizens. This is because it helps lower your net taxable income and tax liability. 


Read on to learn what income tax standard deduction is, how it is calculated, and more.

What are Standard Deductions?

According to the Indian taxation system, salaried employees and senior citizens can claim deductions of ₹50,000 on their salary and pension amount. In the financial year 2018-19, the maximum deduction amount was ₹40,000. 

 

However, from FY 2019-2020 onwards, the maximum deduction amount was increased to ₹50,000. You can claim this tax benefit irrespective of the amount that you spend on transport or medical allowance. 


The purpose of the standard deduction is to provide relief to salaried individuals belonging to the middle class and simplify the tax filing process.

Standard Deduction for Salaried Individuals

If you are a salaried individual, you can claim an income tax standard deduction of ₹50,000 from your gross salary. To understand the deduction in a better way, check out this table. 

Particulars

Amount

Gross Salary 

₹9,00,000

Transport Allowance (non-taxable)

₹0

Medical Allowance (non-taxable)

₹0

Standard Deduction

₹50,000

Net Taxable Income

₹8,50,000

Standard Deduction for Senior Citizens

Senior citizens receive a pension, which is taxable under the ‘Income from Salary’ head. While actual salaries get a standard deduction of ₹50,000, it is different for senior citizens. 


Under Section 16, the standard deduction for senior citizens is either ₹50,000 or the amount of pension in a financial year, whichever is less.

How is Standard Deduction Calculated?

The calculation of standard deduction in income tax is as per the stipulations and amendments. 

 

Here is an example of how standard deduction has progressed: 

Particulars

FY 2022-23 (Old Regime)

FY 2022-23 (New Regime)

FY 2023-24 (New Regime)

Basic Salary + Dearness Allowance

₹10,00,000

₹10,00,000

₹10,00,000

Travel Allowance (non-taxable)

₹0

₹0

₹0

Medical Allowance (non-taxable)

₹0

₹0

₹0

Other Taxable Allowance

₹1,50,000

₹1,50,000

₹1,50,000

Gross Salary

₹8,50,000

₹8,50,000

₹8,50,000

Standard Deduction

₹50,000

₹0

₹50,000

Total Income

₹8,00,000

₹8,50,000

₹8,00,000

Other Deductions

₹1,00,000

₹0

₹0

Income Chargeable to Tax

₹7,00,000

₹8,50,000

₹8,00,000

How to Claim Standard Deduction When Filing Income Tax Return?

You can claim income tax standard deduction while filing your tax return. Generally, employers consider your standard deduction while calculating your payable tax. This calculation helps your employer to deduct your Tax Deducted at Source (TDS). 

 

You need to file the ITR before the due date announced by the Income Tax Department. In case there are any extensions on the last date to file the ITR, the IT department will notify about the same.

Other Deductions for Salaried Individuals

Check out other deductions that salaried individuals can benefit from.

  • Section 80C

Section 80C of the Income Tax Act offers a maximum deduction of ₹1.50 Lakhs on investments. In addition, Section 80CCC offers a deduction for an annuity plan of LIC or other insurance companies.

  • Section 80D

Under Section 80D, you can claim a deduction of ₹25,000 on insurance for yourself, spouse, and dependent children. Also, an additional deduction of ₹25,000 is available for parents’ insurance if they are below 60 years and ₹50,000 if they are above 60 years.  

  • Section 80E

Section 80E allows you to claim deductions on interest that you pay during the repayment of education loans for higher studies. This deduction is applicable whether you availed the loan for your spouse, children, or a student for whom you are a legal guardian.

Other Deductions for Senior Citizens

Here are other deductions for senior citizens or pensioners.

  • Section 80D

According to Section 80D, senior citizens can avail of ₹50,000 on the payments of health insurance premiums.

  • Section 80TTB

Section 80TTB offers a deduction of up to ₹50,000 for senior citizens on interest from bank accounts and deposits, post office deposits, and deposits with NBFCs.

  • Section 80DDB

Section 80DDB allows a deduction of up to ₹1 Lakh for senior citizens for medical treatment. These include some specific ailments and diseases.

 

With this information in hand, you can claim standard deduction income tax and other deductions to save on taxes. 


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FAQs on Standard Deduction in Income Tax

Can pensioners benefit from standard deduction?

Yes, pensioners can also benefit from the standard deduction in income tax of ₹50,000 in a financial year.

Can I claim section 80C deductions along with standard deduction?

Yes, you can claim the standard deduction in income tax along with section 80C deductions.

Can I claim medical and transport allowance along with the standard deduction?

No, you cannot claim transport and medical allowance. You can only claim the standard deduction of ₹50,000.

Am I allowed to claim deductions of ₹50,000 for returns before FY 2019-20 as well?

No, the ₹50,000 standard deduction is applicable for the FY 2019-20 and succeeding years. You are not allowed to revise your ITR and claim the deduction.

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