Budget 2026: Standard deduction remains same for FY 27

Standard deduction

• Budget 2026: No change in standard deduction for salaried employees, pensioners
• No changes in tax slabs, exemptions, or deductions for both old and new regimes
• Non-audit businesses and trusts get extended tax return deadline to August 31

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Finance Minister Nirmala Sitharaman on February 1 has maintained the standard deduction at the existing level for salaried employees and pensioners in Budget 2026, offering stability but no additional tax relief for individuals.

In old tax regime Standard deduction of Rs 50,000 is available for all salaried individuals and pensioners while in new tax regime Standard deduction of Rs 75,000 is available for all salaried individuals and pensioners.

With the standard deduction unchanged, taxable income for most salaried taxpayers will remain broadly the same as last year, unless there are changes in salary, bonuses or other income components. Many middle-class taxpayers had expected an upward revision in the deduction to offset higher household expenses and inflationary pressures.

No changes have been announced in the new and old tax regime either. Existing slabs, exemptions and deductions continue unchanged, allowing taxpayers to choose between the two systems at the time of filing returns.

Experts said the decision may disappoint sections of taxpayers who were hoping for direct relief. However, they added that retaining the structure could encourage gradual adoption of the new tax regime, which offers lower rates and simpler compliance, especially for those without significant deductions.

For individuals with limited investments or exemptions, the new regime continues to remain the simpler option, even without any fresh changes in this year’s Budget.

Due date for filing of tax returns will continue same for Individuals filing ITR-1 and ITR-2, i.e. July 31 deadline. " Relief has been provided for non-audit business entities and trusts, who previously had due date of July 31, will now be allowed to file their returns up to August 31," said Kunal Savani, Partner, Cyril Amarchand Mangaldas.