Section 19, Income-tax Act 2025: Deductions from salaries

What changed when Section 16(ia) became Section 19?

The money did not move, only the address. The standard deduction lived in Section 16(ia) of the Income-tax Act 1961. The Income-tax Act 2025, in force from tax year 2026-27, carries it into Section 19, the section titled 'Deductions from salaries', a numbered table that gathers every deduction and exemption you can set against salary into one place. The amounts are identical: ₹75,000 where your tax is computed under the new regime (Section 202(1), the successor to Section 115BAC), and ₹50,000 in any other case.

Section 19 is wider than the old Section 16. Where the 1961 Act split salary reliefs across Section 16 (standard deduction and professional tax) and several clauses of Section 10 (gratuity, commuted pension, leave encashment and the rest), the 2025 Act folds them into one table of fourteen entries. For the standard deduction itself nothing changes: the same flat figure, the same automatic claim, the same two regime-linked amounts.

Section number and the 'Deductions from salaries' title confirmed from four independent published copies of the Act.†

Who gets the standard deduction, and who does not?

Anyone with income taxed under the head 'Salaries', and only them. The deduction attaches to the kind of income, not to a person or a job title, so what matters is that you earn salary.

It reaches:

• Salaried employees, private-sector, government and PSU staff alike, on either regime.
• Pensioners drawing a pension from a former employer: that pension is taxed as salary, so it carries the full standard deduction. A CBDT clarification in 2018 settled the point and it has not changed since.
• Anyone with a salary component in a mixed year: leave a job to freelance mid-year and the salary part still gets the deduction, even though the freelance part does not.

Left out: freelancers and business owners (their income is business income, deducted differently under Section 58 and its neighbours), people whose only income is rent, interest or capital gains, and family-pension recipients, whose separate deduction is covered below.

How much is it: ₹75,000, ₹50,000, or your salary?

Three figures, and the smallest wins. The standard deduction is ₹75,000 on the new regime and ₹50,000 on the old, and it can never exceed your salary for the year. A retiree whose only income is a ₹60,000 annual pension deducts ₹60,000, not ₹75,000, because Section 19 caps it at 'the amount of the salary'. Both figures have held since FY 2024-25 and carry into tax year 2026-27 unchanged.

The ₹75,000 is tied to the regime, not to your choosing it. Section 19 grants it 'where income-tax is computed under Section 202(1)', the new regime that is now the default, and ₹50,000 in any other case. Because most people who do nothing stay on the new regime, most salaried filers now get the larger figure. Professional tax and the family-pension deduction are separate lines, set out below alongside the standard deduction so the whole salary-deduction picture sits in one place.

The family-pension figures and their Section 93 home come from practitioner copies of the Act.†

How the deduction lowers your tax, step by step

The deduction is worth your top slab rate, not its face value. On the new regime a ₹75,000 deduction saves ₹3,750 at the 5% slab but ₹22,500 at the 30% slab, before cess. The diagram traces the ₹12.75 lakh zero-tax path.

Four steps, all automatic in a payroll or return utility:

• Add up your salary for the year: basic pay, dearness allowance, bonus, taxable allowances and perquisites, plus any pension from a former employer.
• Take out the exempt part of allowances first, such as HRA and leave travel, where the old regime allows them.
• Subtract the standard deduction, ₹75,000 on the new regime or ₹50,000 on the old, capped at the salary figure. What remains is your income under the head 'Salaries'.
• Add your other income, apply your regime's slab rates, then the Section 156 rebate. On the new regime the rebate zeroes the tax up to ₹12,00,000 of total income, which is why ₹12.75 lakh of salary (₹12,00,000 after the ₹75,000 deduction) is the point up to which a salaried person pays nothing.

One standard deduction across two employers

One deduction a year, however many salaries you draw. The commonest mistake, and one of the commonest tax notices, is claiming the standard deduction twice. Change jobs during the year and each employer issues a Form 16 that applies its own ₹75,000; carry both into your return unaltered and you have deducted ₹1,50,000 against a limit of ₹75,000.

The fix is to compute your own total. Add the salary from both Form 16s, subtract a single ₹75,000, and pay the difference. The second worked example below runs the arithmetic, and the shortfall it finds (₹29,900) attracts interest for short-paid advance tax if it is not squared up.

Two more corners worth knowing:

• Salary plus pension in one year: someone who retires mid-year draws salary and then pension, both under the salary head. It is still one standard deduction across the two, capped at their combined total.
• A tiny or part-year salary: because the deduction cannot exceed salary, it cannot create or enlarge a loss. Your salary income floors at zero, never turning negative.

Interest on short-paid advance tax ran under Sections 234B and 234C of the 1961 Act; their 2025-Act successors carry the dagger.†

Pension and family pension: two different deductions

Keep the two pensions apart, because they are taxed under different heads and deducted by different rules. A pension you draw from your own former employer, whether the monthly (uncommuted) amount or the taxable part of a lump sum (commuted), is salary. It gets the full ₹75,000 or ₹50,000 standard deduction like any other salary.

Family pension is different. It is the pension paid to the spouse or dependant of a deceased employee, and the recipient never worked for that employer, so the law taxes it as 'income from other sources', not salary. It carries its own, smaller deduction: one-third of the pension or ₹25,000 on the new regime (₹15,000 on the old), whichever is less. That deduction lived in Section 57(iia) of the 1961 Act, and practitioner copies place it in Section 93 of the 2025 Act.

The ₹25,000 new-regime family-pension figure came in from FY 2024-25 (Finance (No. 2) Act 2024); the old-regime figure stays ₹15,000.†

What the standard deduction replaced, and the rest of Section 19

The standard deduction is not new money; it is a bundle. When Budget 2018 brought it back at ₹40,000, it scrapped two older salary reliefs: the transport allowance of ₹1,600 a month (₹19,200 a year) and the medical reimbursement of ₹15,000 a year, both of which needed bills. The trade was one flat, receipt-free figure for two fiddly ones, and successive Budgets have since raised it well past what those two were worth.

Section 19 carries more than the standard deduction. Its table also keeps the deduction for professional tax, the tax on employment a state levies under Article 276(2) of the Constitution, deductible in full but only on the old regime; the new regime allows the standard deduction and almost nothing else from this table. The gratuity, commuted-pension and leave-encashment exemptions that used to sit in Section 10 now live in Section 19 too.

Practitioner copies of the Section 19 table carry the standard deduction and the professional-tax deduction but do not show the old entertainment-allowance deduction that Section 16(ii) gave government employees.†

How to claim it: there is nothing to file

You claim nothing and attach nothing. The standard deduction is applied inside the computation: your employer's payroll subtracts it before deducting TDS, and the return utility subtracts it again when you file. No form, no bills, no declaration is needed for this particular relief; it is the one deduction that asks for no paperwork at all.

The only care it needs is when the software cannot see your full picture, above all with two employers. Tell your new employer about your previous salary through Form 12B so its TDS is computed on the combined figure with a single standard deduction, and the year-end shortfall never arises. If you did not, reconcile it yourself at filing.

Should you switch to the old regime for a bigger deduction stack?

Not for the standard deduction alone. Moving to the old regime cuts your standard deduction from ₹75,000 to ₹50,000, a ₹25,000 step down, so the old regime must make up that ground plus the gap in slab rates before it wins. It does that only when your other old-regime deductions are large.

Here is the break-even in numbers. On the new regime a salaried filer earning up to ₹12,75,000 pays zero tax (₹75,000 deduction, then the Section 156 rebate on ₹12,00,000). To beat zero the old regime needs enough deductions to reach nil tax too, which at these incomes means stacking a full ₹1,50,000 Section 123 investment basket, up to ₹2,00,000 of home-loan interest (Section 22), ₹25,000 to ₹1,00,000 of health premiums (Section 126) and real HRA on top of the ₹50,000. Few salaried people clear that bar below ₹15 lakh of salary, which is why the new regime, with the bigger standard deduction baked in, is the default that suits most.

Three rules of thumb:

• Below ₹12.75 lakh of salary on the new regime your tax is already zero, so no old-regime deduction can improve on nothing.
• The ₹25,000 difference in the standard deduction is worth ₹1,250 to ₹7,500 a year depending on your slab: a tiebreaker, never the deciding factor.
• Run both regimes through the income-tax calculator with your actual deductions before opting; the standard deduction is only one line in that comparison.

Worked examples

Section 19 FAQs

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