Budget 2024: Union Finance Minister Nirmala Sitharaman on Tuesday (July 23) under new tax regime, hiked the standard deduction to ₹ 75,000 from the current ₹ 50,000. Salaried employee will now stand to save ₹ 17,500 in income tax.

Revised  Tax structure in new tax regime – check here 

₹ 0-3 lakh: Nil (unchanged)

₹ 3-7 lakh: 5% (vs 5% for Rs 3-6 lk before)

₹ 7-10 lakh: 10% (vs 10% for Rs 6-9 lk before)
₹ 10-12 lakh: 15% (vs 15% for Rs 9-12 lk before)
₹ 12-15 lakh: 20% (unchanged)
Above ₹ 15 lakh: 30% (unchanged)

Standard deduction is a fixed amount that taxpayers can deduct from their taxable income without the need for receipts or expense proofs. It reduces the taxable income, thereby lowering the overall tax liability.

The government also announced a comprehensive review of the Income Tax Act to make it more user-friendly. FM Sitharaman also mentioned plans to introduce a standard operating procedure (SoP) for TDS defaults and to simplify the process for compounding such offences.

Over two-thirds of individuals opted for the new income tax regime, Sitharaman informed the Lok Sabha.

In the last financial year’s budget, Finance Minister Nirmala Sitharaman proposed a standard deduction of ₹50,000 for salaried individuals and pensioners under the new tax regime.

This deduction applies by default unless taxpayers choose to opt-out.

Additionally, the income threshold eligible for tax relief under Section 87A was raised to ₹7 lakh.

How standard deduction limit has changed over the years?

Year	Details
2004-2005	The standard deduction initially introduced to assist salaried individuals and pensioners in offsetting employment-related expenses, was removed as part of tax simplification measures.
2018	The standard deduction made a comeback in the Union Budget, setting the limit at ₹40,000 for both salaried employees and pensioners.
February 1, 2019	The Interim Budget raised the standard deduction limit from ₹40,000 to ₹50,000, providing additional relief to salaried individuals and pensioners. However, this increase was limited to those following the old tax regime.
Budget 2023	To enhance the appeal of the new income tax regime, Budget 2023 extended the standard deduction benefit of ₹50,000 to taxpayers opting for the new regime, thereby ensuring uniform tax relief across both old and new tax structures.

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