New Tax Regime – Standard Deduction

Union Finance Minister Nirmala

Sitharaman, in her Budget 2023
announcement, said that the
standard deduction for salaried
employees will now be a part of 'new
tax slab’.

Each salaried person with an income

of Rs 15.5 lakh or more will stand to
benefit by Rs 52,500 as standard
deduction, FM said.

This statement has created some confusion on whether standard deduction

is available for salary below Rs. 15.5 lakh.

Standard deduction is available for every

salaried person under the new tax regime.
In the next slide, we have simplified this for you.
>>Read
CA Nitesh G Buddhadev
New Tax Regime – Standard Deduction
The fine print of the Budget clearly states that standard deduction [section
16(ia)] will be allowed for new tax regime [section 115BAC] .

It is nowhere mentioned that standard deduction under new tax regime is

for salary above Rs. 15.5 lakh only.

Standard deduction is available for every

salaried person under the new tax regime.
See next slide to understand what the Rs. 52,500 saving stands for.
>>Read
CA Nitesh G Buddhadev
New Tax Regime – Standard Deduction
“Each salaried person with an income of Rs 15.5 lakh or more will stand
to benefit by Rs 52,500”
- Union Finance Minister Nirmala Sitharaman

This statement was an example given by finance minister to demonstrate

that for a person earning Rs. 15.5 lakh the total tax saving due to change in
slab rate and introduction of standard deduction as demonstrated below:

Current Proposed (FY 2023-24)

Particulars
New Regime New Regime

Salary 15,50,000 15,50,000

Standard Deduction - 50,000

Taxable Salary 15,50,000 15,00,000

Tax liability
2,02,500 1,50,000
(ignore cess for simplicity)

Benefit 52,500
>>Read
CA Nitesh G Buddhadev
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