Standard Deduction Under Section 19 (Old Section 16(ia)): Claim Guide for Tax Year 2026-27

A salaried client walked into our Raipur office last month with a Form 16 from his previous employer showing a standard deduction of ₹50,000, and a Form 16 from his current employer (he switched jobs mid-year) showing ₹75,000. He assumed one of them was wrong. Neither was. One employer was computing tax under the old regime default that used to apply, the other under the new regime, and the two carry different standard deduction figures. This mix-up is common enough that it's worth writing down properly.

The standard deduction is the flat amount every salaried employee and pensioner can knock off their gross salary before arriving at taxable salary income, with no bills, no proof of expenditure, no questions asked. It used to sit at Section 16(ia) of the Income Tax Act, 1961. Under the Income Tax Act, 2025, which replaced the 1961 Act with effect from 1 April 2026, the same provision has moved to Section 19.

The Current Amount, and Why the Distinction Between Regimes Matters

For Tax Year 2026-27 (what used to be called Assessment Year 2026-27), the numbers are:

This gap opened up a few years back when the government wanted to make the new regime more attractive without touching the old one, and it has stayed that way since. If you are a salaried employee who has not actively opted for the old regime, your employer's TDS computation defaults to the new regime and the ₹75,000 figure applies. If you've filed Form 10-IEA (or its equivalent declaration to your employer for TDS purposes) to stick with the old regime, you get ₹50,000, but you also retain access to HRA, 80C, and the rest of the old regime's deduction basket — the standard deduction is only one piece of a larger trade-off between the two regimes.

Pensioners get exactly the same treatment as salaried employees on this point. If you receive a pension from your former employer (not a family pension, which is different — more on that below), it is taxed under the head "Salaries," and the same standard deduction applies in full.

The Structural Change That's Genuinely Worth Noting

Here is the part that actually changed beyond a mere section renumbering, and it's a change most commentary glosses over. Under the old 1961 Act, the standard deduction amount itself was never written into the Act. Section 16(ia) simply said "a deduction of fifty thousand rupees or the amount of salary, whichever is less" — but that figure existed because Parliament amended the Act through the annual Finance Act. Every Budget, in theory, could have altered it, and periodically did (it started at ₹40,000 in 2018, moved to ₹50,000 in 2019, and the new-regime figure was bumped to ₹75,000 more recently).

Under the Income Tax Act, 2025, the ₹75,000 figure for the new regime is codified directly within Section 19 itself, as passed by Parliament with Presidential assent, rather than being left as a number that rides on whatever the Finance Act of a given year says. Practically, this doesn't change what you claim this year. But it does mean the figure now carries the weight of primary legislation rather than an annual amendment, and any future change to it would need to go through amending the principal Act rather than sliding in through a Finance Bill clause. Whether that makes future increases harder or easier is a matter of legislative process, not something either of us needs to worry about for this year's return — but it's a structural point clients sometimes ask about when they hear "new Income Tax Act," so it's worth having a straight answer ready.

Family Pension: A Different, Lower Deduction

This is where confusion causes real errors on returns. A family pension — the amount a spouse or legal heir receives after the death of an employee or pensioner — is not taxed under "Salaries." It falls under "Income from Other Sources." Because of that classification, the standard deduction under Section 19 does not apply to it at all. Instead, family pension recipients get a separate, much smaller deduction: the lower of one-third of the pension received, or ₹25,000, whichever is less. This deduction is available under both the old and new tax regime.

We've seen returns where a widow's family pension of, say, ₹4,20,000 a year had ₹75,000 knocked off it under the standard deduction head by mistake, when the correct deduction was only ₹25,000 (one-third of ₹4.2 lakh is ₹1.4 lakh, but the ₹25,000 cap governs). That's a ₹50,000 overstatement of deduction, and it's exactly the kind of mismatch the CPC's automated processing catches against the AIS/TIS data reported by the pension-disbursing bank. If you're filing on behalf of an elderly family member receiving a family pension, check this line specifically.

A Worked Example

Take a salaried employee in Raipur with a gross salary of ₹9,00,000 for the year, filing under the new regime.

• Gross salary: ₹9,00,000
• Less: Standard deduction under Section 19: ₹75,000
• Salary income chargeable to tax: ₹8,25,000

Under the old regime, the same employee, assuming they claim no other deductions for a moment, would show:

• Gross salary: ₹9,00,000
• Less: Standard deduction under Section 19: ₹50,000
• Salary income chargeable to tax: ₹8,50,000

The ₹25,000 gap in the deduction itself is small next to what old-regime deductions like 80C, 80D, and HRA could add up to for someone with a home loan, insurance premiums, and rented accommodation. The standard deduction should never be the deciding factor in choosing a regime on its own — it's one line in a larger comparison that we run for every client before the financial year closes, not after.

Who Cannot Claim It

Business income, professional fees, and income from a proprietorship or partnership firm are not eligible for this deduction — it attaches only to salary and pension income taxed under that specific head. A director drawing remuneration that's actually structured as professional fees rather than salary, for instance, doesn't get this benefit on that portion. If your Form 16 shows the deduction but you also have significant freelance or consulting income reported separately, make sure the deduction is being applied only against the salary component during return preparation.

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