A standard deduction of ₹50000 was introduced in the Budget 2018 in lieu of the exemption of transport allowance and reimbursement of miscellaneous medical expenses. Budget 2020 has introduced a new tax regime where lower tax rates were applicable but certain deductions were disallowed. One such deduction disallowed was a standard deduction of ₹50000 from salary income.
To give some extra relief to salary earners under the new tax regime, Finance Ministry has included a standard deduction as an allowable deduction from FY 2023-24 (AY 2024-25).
Now salaried individuals opting for the new tax regime can avail of a standard deduction of Rs 50,000. Family Pensioners can also opt for a standard deduction of Rs 15,000 under the new tax regime.