🔖 Tax & Compliance
What if SD was ₹75,000?
For an ₹8 lakh income, you could save ₹2,600 annually!
₹2,600 SAVINGS
“Many salaried Indians are still confused about the new tax regime. The biggest question I get is often about deductions. Understanding if a higher standard deduction, like ₹75,000, would make a real difference is key to smart tax planning.”
— Anshuman Kumar, FP&A Manager at InfoBuddy Finance
This guide is for salaried Indians (25-42 years old) who want to understand the new tax regime. You probably earn between ₹50,000 and ₹1.5 lakh monthly. You might feel overwhelmed by tax rules. This article clarifies the current standard deduction and explores the benefits of a potential ₹75,000 standard deduction.
Priya, a 31-year-old marketing executive in Bangalore, earns ₹90,000 a month. She always heard that the new tax regime meant “no deductions.” So, she stuck to the old regime, scrambling every year to find investments for her Section 80C. Last year, she just didn’t have enough to invest. She felt frustrated, thinking she was losing out on tax savings.
This is a common story. Many of you might feel the same way. The truth is, the new tax regime standard deduction is a game-changer for many salaried Indians. It simplifies things. But what if that standard deduction was even higher, say ₹75,000? Let’s break down what that would mean for your take-home salary.
Understanding the Current Standard Deduction in the New Tax Regime
First, let’s clear up some facts. The new tax regime, which became the default option from Financial Year 2023-24 (Assessment Year 2024-25), offers a standard deduction of ₹50,000 for salaried individuals. This is important. You don’t need to hunt for investment proofs to claim it. Source: Income Tax Department — Verified October 2024 This standard deduction applies to your gross salary, reducing your taxable income straight away. For those with a family pension, an additional deduction of ₹15,000 is also available. Source: Income Tax Department — Verified October 2024Standard Deduction Snapshot (FY 2023-24 / AY 2024-25)
Old Tax Regime (Salaried)
₹50,000
New Tax Regime (Salaried)
₹50,000
New Tax Regime (Family Pension)
₹15,000
Effective From
1 April 2023 (FY 2023-24)
The Hypothetical Impact of a ₹75,000 Standard Deduction
Now, let’s talk about the topic input: what if the standard deduction in the new tax regime increased to ₹75,000? This isn’t the current rule, but it’s a useful scenario to explore. A higher new tax regime standard deduction would mean more tax savings for many. Let’s take a salaried individual earning **₹8,00,000 per year** (approx. ₹66,667 per month).| Scenario | Taxable Income | Income Tax | Cess (4%) | Total Tax Payable | Savings |
|---|---|---|---|---|---|
| Gross Salary: ₹8,00,000 | |||||
| Current New Regime (₹50,000 SD) | ₹7,50,000 | ₹30,000 | ₹1,200 | ₹31,200 | Neutral |
| Hypothetical New Regime (₹75,000 SD) | ₹7,25,000 | ₹27,500 | ₹1,100 | ₹28,600 | ₹2,600 |
Who Gains the Most from a Higher Standard Deduction?
An increased standard deduction primarily benefits those who:- Don’t claim many deductions: If you don’t use Section 80C, HRA, or other exemptions, the new regime with a higher standard deduction becomes very attractive.
- Have income just above the tax-free limit: For example, if your income is between ₹7.5 lakhs and ₹10 lakhs, the extra ₹25,000 deduction can significantly reduce your tax burden.
- Prefer simplicity: The new tax regime is simpler. A higher standard deduction makes it even more appealing for those who don’t want to track investments for tax purposes.
Smart Tip: The benefit of a higher new tax regime standard deduction grows as your income increases beyond the ₹7.5 lakh threshold. At higher tax slabs, ₹25,000 extra deduction can save you ₹2,500, ₹5,000 or even ₹7,500 in tax.
New Tax Regime vs. Old: A Quick Comparison
Choosing between the old and new tax regimes is a decision many salaried Indians face each year. The core difference is simple: the old regime offers many deductions and exemptions (like HRA, 80C, 80D), but higher tax rates. The new regime offers lower tax rates, but fewer deductions, with the standard deduction being a key exception.| Feature | Old Tax Regime | New Tax Regime (FY 2023-24 onwards) |
|---|---|---|
| Standard Deduction | ₹50,000 available | ₹50,000 available |
| Section 80C (Investments) | Up to ₹1.5 lakh deduction | Not available |
| HRA Exemption | Available if living in rented accommodation | Not available |
| Home Loan Interest (Section 24b) | Up to ₹2 lakh deduction for self-occupied property | Not available |
| Medical Insurance (Section 80D) | Available | Not available |
| Tax Slabs | Higher tax rates | Lower tax rates (for certain income brackets) |
Rahul’s Realization: How Deductions Change Everything
Rahul, a 33-year-old software engineer in Hyderabad, earns ₹1.2 lakh every month. For years, he simply let his company choose his tax regime. He assumed he needed to invest heavily to save tax. He bought an insurance policy he didn’t really need just for 80C.Rahul’s Tax Turning Point
In my work with salaried clients, I see this all the time. Rahul came to me confused, asking if he should just “give up” on tax savings if he didn’t want more investments. When we compared his tax liability under both regimes for FY 2024-25, even with the current ₹50,000 standard deduction in the new regime, he saw a potential saving of ₹18,000 because his other deductions were minimal. “I thought I needed to do complex things,” he told me. “But simplifying actually saved me more than forcing investments.” He now uses the new regime and invests in options that truly suit him, not just for tax.
Do’s and Don’ts for Choosing Your Tax Regime
Making the right choice for your tax regime can save you thousands. So, what should you do, and what should you avoid?Do’s ✅
✓ Calculate your tax under both regimes for your exact income.
✓ Factor in all eligible deductions under the old regime (80C, HRA, 24b).
✓ Consider if a potential higher standard deduction (like ₹75,000) would benefit you more in the new regime.
✓ Use an online income tax calculator to simplify the comparison.
Don’ts ❌
✗ Don’t assume the old regime is always better just because it has more deductions.
✗ Don’t ignore the new tax regime, especially with the standard deduction benefit.
✗ Don’t make last-minute tax-saving investments you don’t truly need.
✗ Don’t rely on assumptions – verify with actual numbers.
Which Tax Regime Should YOU Choose? — A Simple Decision Guide
The choice depends entirely on your specific financial situation.Your Tax Regime Decision Framework
Choose the Old Tax Regime if:
You claim HRA benefits for rent payments.
Yes
You have home loan interest deductions (Section 24b).
Yes
Your 80C investments (PPF, EPF, ELSS) exceed ₹1.5 lakh.
Yes
Your total deductions (excluding standard deduction) exceed ₹2.5 lakhs.
Yes
Choose the New Tax Regime (Current ₹50k SD) if:
Your total deductions (excluding standard deduction) are less than ₹1.5 lakhs.
Yes
You prefer simpler tax filing with fewer investment proofs.
Yes
Your annual income is between ₹7 lakhs and ₹7.5 lakhs.
Yes (due to ₹50k SD and 87A rebate)
Consider the New Tax Regime (if hypothetical ₹75k SD becomes reality) if:
Your current annual income is between ₹7.5 lakhs and ₹10 lakhs.
Yes
Your priority is highest possible take-home salary without extra investments.
Yes
You forecast minimal other deductions in coming years.
Yes
Your Next Step — Do This Today
Don’t just read and forget. Take action to optimize your taxes.1
Calculate Your Current Tax Liability
Use InfoBuddy’s Income Tax Calculator to quickly compare your tax under both old and new regimes for your exact salary. It takes 2 minutes.
2
Review Your Deductions
Gather your Form 16 and list out all deductions you claimed last year (HRA, 80C, 80D, etc.). This helps identify which regime truly benefits you.
3
Plan for the Future
Based on your calculations, decide if you need to adjust your investments or simply enjoy the benefits of the new tax regime standard deduction.
Frequently Asked Questions
1. Is the ₹75,000 standard deduction currently active in the new tax regime?
No, as of Financial Year 2023-24 (Assessment Year 2024-25), the standard deduction for salaried individuals in the new tax regime is ₹50,000. The ₹75,000 figure is explored as a hypothetical scenario in this article.
2. Who can claim the standard deduction in the new tax regime?
All salaried individuals and pensioners can claim the standard deduction of ₹50,000 under the new tax regime, regardless of whether they have made any investments.
3. Can I switch between the old and new tax regimes every year?
Yes, salaried individuals can choose between the old and new tax regimes each financial year. You can declare your preference to your employer.
4. What deductions am I giving up in the new tax regime?
In the new tax regime, you forgo common deductions like Section 80C, HRA, Section 80D (medical insurance premiums), and interest on housing loan (Section 24b) for self-occupied property.
5. How does the Section 87A rebate work in the new tax regime?
Under the new tax regime, if your taxable income (after standard deduction) is up to ₹7 lakhs, you qualify for a full tax rebate under Section 87A, making your tax liability zero.
6. Should I wait for a potential increase in standard deduction before choosing my regime?
It is always best to make decisions based on current tax laws. While future changes are possible, plan with the existing rules for Financial Year 2024-25. Re-evaluate if any changes are announced.
Navigating tax rules might feel like a maze. But as we’ve explored, even a hypothetical change to the new tax regime standard deduction can significantly impact your take-home salary. The current ₹50,000 standard deduction already brings a lot of simplicity and potential savings for many.
My goal at InfoBuddy is to make these complex topics simple for you. Remember, understanding your options means you are making informed decisions. That’s how you build true financial confidence. Don’t let confusion cost you money.
Disclaimer: This article is for informational and educational purposes only. It does not constitute financial advice, investment advice, or tax advice. The examples and numbers used are illustrative and may not reflect your personal situation. Please consult a qualified financial advisor or tax professional for advice specific to your circumstances. InfoBuddy Finance is not a SEBI-registered investment advisor.