Definition
Standard Deduction (Salary)
The standard deduction is a flat amount subtracted from salary or pension income without needing proof, reducing taxable income for salaried individuals and pensioners.
The standard deduction is a fixed deduction available to salaried employees and pensioners, claimed automatically against salary income with no documentation required. It replaced earlier transport and medical reimbursement exemptions.
It is available under both the old and new tax regimes, making it one of the few salary benefits that survives in the new regime. It directly lowers your taxable salary.
Because it requires no proof and applies to nearly all salaried taxpayers, it is a simple, universal relief reflected in your employer's TDS computation and Form 16.
Related terms
- Old vs New Tax RegimeIndia offers two personal income-tax regimes: the old one with various deductions and exemptions, and the new one with lower slab rates but most exemptions removed.
- CTC vs Gross vs In-Hand SalaryCTC is the total cost a company bears for you, gross salary is your pay before deductions, and in-hand (net) salary is what actually reaches your bank after taxes and contributions.
- Form 16 (Parts A & B)Form 16 is the TDS certificate your employer issues for salary, with Part A showing tax deducted and deposited, and Part B detailing the salary breakup and deductions.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.