Standard deductions under the new tax regime — what salaried Indians can actually claim
Salaried Indians under the new tax regime can claim a ₹75,000 standard deduction from FY 2024–25. Here's what else you can and cannot deduct.
The new tax regime has been the default since FY 2023–24. If you haven’t actively opted out, chances are your employer is already computing your TDS under it. And yet, most salaried people assume the new regime means no deductions at all — that you just pay tax on whatever lands in your account.
That’s not quite right. There are deductions you can still claim. They’re just fewer, simpler, and honestly, more relevant to how most people in their late 20s and 30s actually live.
Here’s what you need to know.
The Standard Deduction Is Real — and It’s ₹75,000
The biggest deduction under the new regime is the standard deduction of ₹75,000. This was increased from ₹50,000 in the Union Budget 2024, effective FY 2024–25.
You don’t apply for it. You don’t submit bills or proof. It’s automatically subtracted from your gross salary before your taxable income is calculated. If you’re a salaried employee, you get it — full stop.
Here’s how it plays out in real numbers. Say you’re earning ₹12 lakh per year as a software developer in Pune. Your taxable income under the new regime isn’t ₹12 lakh — it’s ₹12 lakh minus ₹75,000 = ₹11.25 lakh. That difference matters because it can shift you across a tax slab.
The NPS Deduction That Most People Miss
The second deduction worth knowing is under Section 80CCD(2) — the employer’s contribution to your National Pension System (NPS) account.
Here’s the thing: this deduction survives in the new regime when most others don’t. If your employer contributes to NPS on your behalf, that amount — up to 10% of your basic salary — is deductible from your taxable income. This is separate from anything you contribute yourself.
Let’s say you’re working at an MNC in Bengaluru with a basic salary of ₹60,000/month (₹7.2 lakh/year). If your employer contributes 10% of basic to NPS, that’s ₹6,000/month or ₹72,000/year. That ₹72,000 comes straight off your taxable income under the new regime.
If your employer doesn’t offer NPS as part of your CTC, it’s worth asking HR whether it can be restructured. Many larger employers — TCS, Infosys, several PSUs — already include this. It’s not a product you buy; it’s a salary structure conversation.
What You Cannot Claim Anymore (And Why That’s Okay)
Under the old regime, salaried employees could claim a whole list of deductions — ₹1.5 lakh under 80C (PPF, ELSS, LIC premiums), HRA, home loan interest under Section 24, ₹25,000 health insurance under 80D, and more. None of these work under the new regime.
That sounds like a loss. But the new regime also has lower slab rates. The math doesn’t always favour the old regime, especially if you’re not loading up on 80C investments anyway.
To see which regime actually saves you more tax, use our tax calculator — it runs both scenarios side by side so you can make the comparison in under two minutes.
A quick comparison for a ₹12 lakh salary with ₹2 lakh in claimed deductions under the old regime:
| Scenario | Taxable Income | Approx. Tax (FY 2024–25) |
|---|---|---|
| New regime (₹75,000 std deduction only) | ₹11.25 lakh | ~₹1,17,000 |
| Old regime (₹75,000 std + ₹2 lakh deductions) | ₹9.25 lakh | ~₹1,05,000 |
The old regime wins here — but only because ₹2 lakh in deductions is being fully utilised. If your actual 80C investments are closer to ₹50,000, the new regime is likely cheaper.
The One Thing to Do Before March 31
If your employer hasn’t asked you to declare your tax regime preference for FY 2024–25, assume they’ve defaulted you to the new regime. That’s fine — but make sure you’ve declared your NPS employer contribution if applicable, so that deduction is being accounted for in your TDS calculation.
At the time of filing your ITR, you can switch regimes if the numbers work out better for you. The deadline to file is July 31, 2025 for most salaried individuals with no audit requirement. If you’re salaried with no business income, you have the flexibility to choose each year.
Don’t leave this to the last week of July. Run the numbers in April once your Form 16 comes in.
Frequently Asked Questions
Can I claim HRA under the new tax regime?
No. HRA exemption is only available under the old tax regime. If you’re paying significant rent — say, ₹25,000/month in Mumbai — and your employer allows you to switch regimes, it’s worth calculating whether HRA savings offset the lower slab rates of the new regime.
Is the ₹75,000 standard deduction automatic, or do I need to claim it?
It’s automatic for salaried employees. Your employer deducts it before computing your TDS, and it appears directly in your Form 16. You don’t need to submit any paperwork.
What happens if I have two jobs in the same financial year?
Each employer applies the standard deduction independently. When you file your ITR, you can only claim ₹75,000 once — so you may end up with a tax liability if too little TDS was deducted across both jobs.
Can I claim 80C under the new regime if I invest in ELSS on Groww or Zerodha?
No. Section 80C deductions — including ELSS mutual funds, PPF, and life insurance premiums — are only available under the old tax regime. ELSS funds are still good investments; the tax deduction is just no longer a benefit under the new default regime.
What is Section 80CCD(2) and how is it different from 80C?
Section 80CCD(2) covers your employer’s contribution to NPS, which is deductible even under the new regime. Section 80C covers your own investments (like PPF or ELSS), which are not. The distinction is who’s contributing — and only the employer’s NPS contribution survives the regime switch.