The government has amended the Income Tax Act, 1961 to clarify the situation about Rs 75,000 standard deduction in the new regimen. The government had announced to increase the standard deduction from Rs 50,000 to Rs 75,000 in the new regime in Union Budget 2024. This explanation has also been included in the Income Income Tax Bill, 2025. This bill was passed in Parliament. It is expected to be implemented from 1 April next year.
Only jobs benefit from standard deduction
It is important to keep in mind that standard deduction (Standard deduction) Only people who do the benefit of the jobs. The standard deduction in both new and old regimen of earlier income tax was Rs 50,000. In Union Budget 2024, Sarkara increased it to Rs 75,000 in the new regimen. However, it is still Rs 50,000 in the old regimen. Standard deduction reduces the tax liability of the employee. The government added a new provision to the Finance (No 2) Act, section 16 (IA) of the Finance (No 2) Act, 2024 to increase standard deduction to Rs 75,000.
Finance Minister posts on social media about amendment
Finance Minister Nirmala Sitharaman has posted a post on the social media platform X about this. He has said in it that apart from the new Income Tax Bill, we are making some special amendments in the Income Tax Act, 1961. Its purpose is to clarify the situation about the new regimen of income tax. It has been said in this amendment that some special deductions will have to be done before the calculation of income coming under ‘Salries’.
Amendment Income Tax Bill, also included in 2025
Deduction of Rs 50,000 will have to be done under the new provision included in Section 16 (IA). If the calculation of income tax is done under section 115 BAC sub-section (II), then the provision of this clause will be the same as it is for 50 thousand rupees, but instead the option of Rs 75,000 will be used. This change has also been included in the Income Tax Bill, 2025.
The situation on deduction in UPS is now clear
In this amendment, the confusion in the case of deduction regarding Uniform Pension Scheme (UPS) has been abolished. After this it is clear that the same tax benefits will be available in UPS, which are available in the National Pension System (NPS). Income tax bill, 2025 is expected to come into effect from 1 April next year. This Income Tax Act, 1961 will be applicable. The rules of the Income Tax Act, 1961 came into force from April 1, 1962.