Income Tax · Salary
Standard Deduction Under Section 16 Ia (India, 2026)
The standard deduction under section 16(ia) is the simplest tax break a salaried person gets: a flat amount subtracted from salary income, with no bills to keep and no proof to submit. It replaced the old transport and medical allowances with a single fixed figure, so almost every salaried employee and pensioner benefits from it automatically. This guide explains how much the standard deduction is in 2026, how it differs between the old and new tax regimes, who can claim it, and how it fits into your salary tax calculation.
- What it is: a flat deduction from salary or pension under section 16(ia), with no proof or bills needed.
- Old regime amount: Rs 50,000 (confirm for your assessment year).
- New regime amount: Rs 75,000 (confirm for your assessment year).
- Who gets it: salaried employees and pensioners taxed under the salary head; not for business, rent or capital gains.
- Applied first: subtracted automatically before other deductions; capped at your salary.
- Act change: the Income-tax Act 2025 is replacing the 1961 Act; the section may be renumbered but the deduction continues.
01What section 16(ia) says
Section 16 of the Income-tax Act lists deductions allowed from income chargeable under the head "Salaries". Clause (ia) is the standard deduction: a flat amount that every salaried taxpayer and most pensioners can subtract from their salary before tax is worked out.
Unlike most deductions, it needs no investment, no spending and no documents. If you have salary or pension income, you simply get it. Section 16 also allows a deduction for professional tax (clause iii) and an entertainment allowance for some government employees (clause ii), but clause (ia) is the one that applies to almost everyone.
Section numbers are changing
India is moving from the Income-tax Act 1961 to the Income-tax Act 2025. The standard deduction itself continues, but the section reference may be renumbered. Always confirm the section and amount for your assessment year on the income tax portal.
02How much is the standard deduction
The standard deduction is a fixed rupee amount, not a percentage. The figure depends on which tax regime you are in.
| Regime | Standard deduction for salary or pension | Notes |
|---|---|---|
| Old regime | Rs 50,000 | Available alongside other deductions like 80C and 80D |
| New regime | Rs 75,000 | Higher amount, but most other deductions are not available |
Pensioners who receive pension from a former employer are treated like salaried taxpayers for this purpose and get the same standard deduction. Family pension received by a dependant is treated differently and has its own separate deduction.
03Who can claim it
The standard deduction under section 16(ia) is available to:
- Salaried employees, in the private or government sector.
- Pensioners receiving pension from a former employer, taxed under the salary head.
It is not available against business or professional income, rental income, capital gains or interest. It applies only to income taxed as salary or as pension from a former employer. The deduction is capped at the salary itself, so it cannot reduce your salary income below zero.
04Old regime vs new regime
The standard deduction is one of the few deductions you get in both regimes, which is why it matters when you compare them.
- Old regime: Rs 50,000 standard deduction, plus you can claim deductions such as 80C investments, HRA and 80D medical insurance.
- New regime: a higher Rs 75,000 standard deduction, but most other deductions are not allowed. The new regime is the default unless you choose the old one.
Which regime saves you more depends on how many other deductions you actually use. If you claim large 80C, HRA or 80D amounts, the old regime may still win despite its smaller standard deduction. To compare the slabs, see the new regime tax slab, and for medical insurance relief in the old regime, see tax deduction under section 80D.
05A simple worked example
Suppose your gross salary is Rs 9,00,000 in a year.
- Under the new regime: subtract the Rs 75,000 standard deduction, leaving Rs 8,25,000 of salary income before slab rates apply.
- Under the old regime: subtract the Rs 50,000 standard deduction, leaving Rs 8,50,000, then subtract any 80C, 80D or HRA you are eligible for.
The standard deduction is applied first, automatically, before your other deductions. You do not need to claim it separately with proof; the return and most employers apply it for you. Always confirm the current amount for your assessment year, because the figures are set by the annual Finance Act.
06How Claw Tax helps
Claw Tax and Accounts is an online tax, GST and accounting service for India that connects you with a verified chartered accountant at a fixed, published price, with a Claw reviewer checking every filing before it is submitted.
For a straightforward salary, the standard deduction is applied automatically when you file your return, and filing a basic ITR yourself on incometax.gov.in is free. People use Claw Tax and Accounts when they want the old-versus-new regime choice worked out properly, when salary comes with perquisites, RSUs or multiple Form 16s, or when they would rather have the return checked before it goes in. A verified chartered accountant picks the regime that fits your numbers, applies every deduction you are entitled to, and a Claw reviewer checks the return before submission, all at a fixed, published price.
This is an online service, and it is not tax advice; a verified CA handles your specifics.
07Frequently asked questions
What is the standard deduction under section 16(ia)?
It is a flat amount subtracted from salary or pension income before tax is calculated, allowed under section 16(ia) of the Income-tax Act. It needs no investment, spending or documents. Almost every salaried employee and most pensioners get it automatically when they file.
How much is the standard deduction in 2026?
It is a fixed rupee amount that depends on your regime: around Rs 50,000 under the old regime and a higher amount, around Rs 75,000, under the new regime. These figures are set by the annual Finance Act, so confirm the exact amount for your assessment year on incometax.gov.in before filing.
Can I claim the standard deduction in the new tax regime?
Yes. The standard deduction is one of the few deductions available in the new regime, and it is actually higher there than in the old regime. Most other deductions, such as 80C and HRA, are not available in the new regime, so the standard deduction is the main relief it offers salaried taxpayers.
Do pensioners get the standard deduction?
Yes, if the pension is received from a former employer and taxed under the salary head, the pensioner gets the same standard deduction as a salaried employee. Family pension received by a dependant is treated differently and has its own separate deduction, not section 16(ia).
Does the standard deduction apply to business or rental income?
No. Section 16(ia) applies only to income taxed as salary or as pension from a former employer. It cannot be claimed against business or professional income, rent, capital gains or interest. Those heads have their own separate rules and deductions.
Do I have to claim the standard deduction separately?
No. It is applied automatically. Most employers factor it into TDS, and the income tax return applies it when you select the salary head. You do not submit any proof for it. Just make sure the correct amount for your regime and assessment year has been applied.