Introduction: Is standard deduction 50000 or 75000 in the new tax regime?
Let me clear this up once and for all. In the
the standard deduction is ₹75,000 for salaried individuals & pensioners—not ₹50,000. That ₹50,000 figure was from the old regime. So if someone tells you it's still ₹50,000, they're working with outdated information. This ₹75,000 deduction is a big reason why many salaried people are now paying zero tax. Let me answer all your related questions in simple terms.
1. How is 12.75 lakh tax-free?
This is the question I get asked most often. Here's how it works—for salaried individuals, a gross income of ₹12.75 lakh is effectively tax-free under the default New Tax Regime. The government has raised the LIMIT TO BE Rs. 12.75 LAKH FOR SALARIED TAXPAYERS. So yes, income up to ₹12.75 lakh will be tax-free for salaried individuals—that's zero tax for most middle-income earners. How exactly? The ₹75,000 standard deduction brings ₹12.75 lakh down to ₹12 lakh taxable income, then the Section 87A rebate wipes out the rest. So ₹12.75 lakh is tax-free. One more tip: you can reduce tax burden with employer contributions to NPS if your salary is slightly above this limit."
2. What is a 75000 rebate in the new tax regime?
Let me clarify a common confusion. The ₹75,000 benefit in the new tax regime refers to the standard deduction available to salaried individuals & pensioners, rather than a tax rebate. People often call it a "rebate," but technically it's a deduction. Here's the difference—a rebate (like Section 87A) directly reduces your tax payable. The ₹75,000 standard deduction reduces your taxable income first. So in the new tax regime, this ₹75,000 acts as a flat deduction. Combined with a rebate of up to ₹25,000 (through Section 87A), you can effectively pay zero tax on incomes up to ₹12.75 lakh. So it's deduction rebate working together."
3. Is income up to 7 lakh tax-free?
Yes & no—it depends on which financial year we're talking about. Yes, under the new tax regime, an income up to Rs. 7 lakh is effectively tax-free. Under Section 115BAC, you can claim a 100% tax rebate under Section 87A to completely nullify your tax liability, provided your net taxable income does not exceed Rs. 7 lakh. But here's the catch: that up to an income of 7 lakh can be a tax-free figure was for older years. The Rs. 7 lakhs tax-free limit was only until FY 2024-25. Now, from FY 2025-26 onwards, the limit has been raised to ₹12 lakh. So technically, no income tax is payable up to the total income of Rs. 7 lakh, which is still true, but the limit is now much higher. For tax-free income, income up to ₹7 lakh can effectively become tax-free—but so can income up to ₹12 lakh now."
4. Can I claim a standard deduction in a new tax regime?
Absolutely yes. This is a common myth that needs busting. Yes, salaried individuals and pensioners can claim a standard deduction under the new tax regime. Both salaried individuals and pensioners get this benefit. The standard deduction applies in both old and new tax regimes—it's not removed. So yes, the standard deduction is applicable in the new tax regime. To be precise, yes, a standard deduction of ₹75,000 is applicable for salaried individuals & pensioners under the new tax regime. So don't worry—you can claim a standard deduction regardless of which regime you pick."
5. Is income under 5 lakhs tax-free
Yes, absolutely. In fact, even more than that is tax-free now. Under the old regime, taxable income of up to 5 lakhs is tax-exempt. Under the new regime, the limit is much higher—income up to ₹12 lakh is tax-free for most people. If your income is taxable under the old regime, the ₹5 lakh limit still applies. But honestly, income up to Rs. 5 lakh is tax-free due to Section 87A rebate—and now, there's no tax to be paid on income up to ₹12.75 lakh. So for someone earning ₹5 lakh, definitely zero tax. Historically, individuals earning up to Rs. 5 lakh annually are exempt from paying income tax, provided their total income must be up to five lakh after deductions.
6. Can I gift 1 crore to my friend?
Yes, you can legally gift ₹1 crore to a friend. However, there's a tax rule you need to know. Under Indian tax law, gifts up to Rs 50,000 per year from a non-relative are exempt from tax. Anything above that—including the entire ₹1 crore—is taxable in the hands of your friend as "Income from Other Sources." So your friend will have to pay tax as per their income slab. The only exception is if the gift is to specified relatives—spouse, siblings, parents, or children. Those are completely tax-free. Also, avoid cash transactions above ₹2 lakh to stay out of trouble. So yes, you can gift—but your friend might not thank you for the tax bill.
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