Tax
Standard deduction
Standard deduction is a flat amount subtracted from salary income before tax, ₹75,000 under the new regime and ₹50,000 under the old, with no proof required.
It replaced the earlier transport and medical allowances in 2018 and is applied automatically by the employer while computing TDS.
It is available only against salary and pension income.
In Indian payroll
Under the new regime, salary up to ₹12.75 lakh is effectively tax-free for FY 2025-26 once the standard deduction and the Section 87A rebate are applied.
What is Standard deduction?
Standard deduction is a flat amount subtracted from salary income before tax, ₹75,000 under the new regime and ₹50,000 under the old, with no proof required.
Why does Standard deduction matter in Indian payroll?
Under the new regime, salary up to ₹12.75 lakh is effectively tax-free for FY 2025-26 once the standard deduction and the Section 87A rebate are applied.
Related terms
In Kuzhu
The Payroll module in Kuzhu is where Standard deduction is handled, on the same employee record as everything else.
WhatsApp us