Impact of Standard Deduction on Disposable Income of Salaried Employees in India
Bhagat Tarun Vikrambhai1, Nisarga.H.L2, Ronit Santosh Khadabadi3, Spandana.A.S4, Dr.Tejaswini.S5
1,2,3,4 MBA 2025-2027, Faculty of Management Studies, JAIN (Deemed-to-be University)
5Assistant Professor, Faculty of Management Studies, JAIN (Deemed-to-be University)
ABSTRACT
This study examines the impact of standard deduction on the disposable income of salaried employees in India. The standard deduction is a fixed amount deducted from gross salary to reduce taxable income, thereby easing the tax burden. With recent reforms in the Indian taxation system, including the introduction of the new tax regime and the increase in standard deduction to ₹75,000, its relevance has significantly increased.
The research focuses on two key aspects: the level of awareness among salaried individuals regarding standard deduction and its influence on tax liability across different income groups. A descriptive research design was adopted, and primary data was collected through a structured questionnaire from salaried employees, along with secondary data from journals and government sources.
The findings reveal that while awareness of standard deduction is relatively high, there is a gap in detailed understanding and practical application. Many individuals are unsure about how the deduction works or whether they are effectively utilizing it. The study also highlights that although the deduction is uniform, its impact varies across income groups, with middle-income earners benefiting the most.
The study concludes that standard deduction plays a crucial role in simplifying taxation and improving disposable income. However, increasing financial literacy and awareness is essential to ensure that salaried employees fully utilize its benefits. The findings provide useful insights for policymakers, employers, and individuals to enhance tax planning and financial decision-making.
KEYWORDS: Standard Deduction, Disposable Income, Salaried Employees, Income Tax, Tax Liability, New Tax Regime, Tax Planning, Financial Literacy, Tax Reforms, Economic Impact, Middle-Income Group, Personal Finance
