Budget 2026: ₹1,50,000 standard deduction for salaried under I-T Act 2025 on experts' wishlist

In the lead-up to the Union Budget speech on February 1, 2026, several experts and industry bodies have urged the government to increase the standard deduction limit for salaried employees under Section 19 of the Income Tax Act 2025.

The standard deduction for salaried employees is provided under Section 16 of the Income Tax Act, 1961. In the new Income Tax Act, 2025, this provision is covered under Section 19. The new Act will come into effect from April 1, 2026.

At present, the standard deduction is capped at ₹75,000 under the new tax regime and ₹50,000 under the old regime.

However, there is a strong demand to increase the standard deduction limits under both regimes. Such a change, experts say, will help employees in view of the rising cost of living and even working.

"Consider enhancing the standard deduction u/s 16 of ITA 1961 (section 19 of ITA 2025) from ₹75,000/- to ₹150,000/- or more to help salaried employees with inflation and increased costs of living.)," experts at the American Chambers of Commerce in India (AMCHAM) said in their Pre-Budget Memorandum 2026.

Earlier, tax experts at KPMG had suggested enhancing the standard deduction to ₹1 lakh in Budget 2026.

"The Union Budget 2026 may consider an increase in the standard deduction for salaried employees to INR1 lakh (currently INR50,000 under the old tax regime and INR75,000 under the new tax regime) to help offset inflation and rising living costs," KPMG said in its "Key expectations from the Union Budget 2026-27".