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CA Intermediate · Taxation · Salaries

Ms. Sneha Iyer, a salaried employee, is paid a monthly salary of ₹70,000 for tax year 2026-27. Her employer, Orbit Pvt. Ltd., deducted professional tax of ₹2,500 for the year. She opts for the new tax regime under the 2025 Act. What is the standard deduction available to her from salary income and what happens to professional tax?

Standard deduction of ₹75,000 is available, and professional tax is not deductible. Under the new regime the standard deduction is ₹75,000, while the entertainment allowance and professional tax deductions are allowed only under the old regime.

  1. AStandard deduction ₹75,000; professional tax also deductible
  2. BStandard deduction ₹75,000; professional tax not deductibleCorrect
  3. CStandard deduction ₹50,000; professional tax deductible
  4. DNo standard deduction; professional tax deductible

Explanation

Under the new regime the standard deduction is ₹75,000 (limited to salary received). Salary is ₹8,40,000 so full ₹75,000 applies. Deduction for professional tax is available only under the old regime, so it is not allowed here.

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