A complete and updated guide to calculate your take-home salary in India. Learn the difference between old vs new tax regimes, deductions, worked examples, and tools to help you estimate your in-hand pay for FY 2025-26.
Introduction
Knowing your take-home salary—the amount you actually receive after all deductions and taxes—is more important than just knowing your gross or CTC (Cost to Company). Whether you're negotiating a job offer, planning expenses, or making financial goals, it helps you understand what truly ends up in your bank.
In this article, you will learn:
- What salary components make up gross salary and CTC
- The differences between old and new tax regimes (including recent updates in Budget 2025)
- How to compute your in-hand salary step by step
- Real examples for different incomes
- Key tools and resources you can use
By the end, you’ll be able to calculate your take-home salary precisely for your situation in India, with the latest policies as of FY 2025-26.
Understanding Salary Components in India
To correctly calculate your take-home salary, you first need to understand what goes into your gross salary / CTC and what parts are deducted. Here are the main components:
| Component | What It Means | Tax / Deduction Relevance |
|---|---|---|
| Basic Salary + Dearness Allowance (DA) | Core portion of salary. Usually the base for other calculations like PF, HRA etc. | Employee’s PF contribution, pension, etc. are computed based on basic + DA. |
| House Rent Allowance (HRA) | Paid if you live in rented accommodation. Partial or full exemption possible. | Exempt up to certain limits under Section 10(13A); depends on rent paid, city, etc. |
| Other Allowances | Transport, medical, leave travel allowance (LTA), special or performance allowances etc. | Some are fully taxable; some partially exempt. |
| Bonuses / Variable Pay / Incentives | Performance based or periodic bonuses. | Usually fully taxable in the year received. |
| Employer Contributions | Contributions by employer to PF (Provident Fund), NPS etc. | Employer’s PF contribution is not part of take-home but part of CTC; affects tax or benefits but not deducted from your pay. |
| Employee Deductions (Statutory and Voluntary) | Your share of PF, professional tax, insurance premiums, other deductions you claim under law. | These reduce gross to arrive at taxable income and then affect take-home. |
| Perks / Reimbursements | Non-cash benefits or expense reimbursements. E.g., meal vouchers, telephone reimbursements, etc. | Some are non-taxable or partially exempt if rules are met. |
To put these in context: your CTC (Cost to Company) is the total amount the company spends on you, including employer PF contributions, perks, etc. Your gross salary is what you’re promised before deductions (employee-PF, taxes), and your take-home salary is what you receive in hand after all deductions.
The Tax Regimes: Old vs New (Latest Updates)
India currently offers two tax regimes for salaried individuals. Deciding which one gives you better take-home depends on your income level, deductions you can claim, and allowances.
New Tax Regime (Section 115BAC)
Recent updates (Budget 2025) have made several changes to make the new regime more attractive. Key features:
- Slab Rates for FY 2025-26 (AY 2026-27) under the new regime:
0 - ₹4,00,000 → 0% tax
₹4,00,001 - ₹8,00,000 → 5%
₹8,00,001 - ₹12,00,000 → 10%
₹12,00,001 - ₹16,00,000 → 15%
₹16,00,001 - ₹20,00,000 → 20%
₹20,00,001 - ₹24,00,000 → 25%
Above ₹24,00,000 → 30% - Standard Deduction has been increased to ₹75,000 for salaried individuals and pensioners in the new regime.
- Section 87A Rebate under the new regime has been enhanced: resident individuals with taxable income up to ₹12,00,000 are eligible for a rebate up to ₹60,000, meaning in many cases income up to this level results in zero tax liability after rebate.
- Note: including the standard deduction, salaried persons earning up to around ₹12.75 lakh may end up paying no tax under the new regime because of rebate + standard deduction.
Old Tax Regime
- Offers more deductions/exemptions (like Section 80C, 80D, interest on home loan, etc.) which you can use to reduce taxable income.
- Standard deduction is lower than under new regime (was ₹50,000 earlier).
- Section 87A also exists under the old regime, but lower thresholds for income to fully benefit.
Latest Rules, Key Changes & What You Must Know for FY 2025-26 / Budget 2025 Impact
Several important rule changes were introduced in Budget 2025 (effective FY 2025-26) that affect how much of your salary you actually take home. Being aware of them helps avoid surprises.
Updated Tax Slabs & Rates under the New Regime
For FY 2025-26 (Assessment Year 2026-27), the new tax regime has revised income slabs, making the system more progressive and giving relief to many. These are the tax rates:
| Annual Taxable Income (New Regime) | Tax Rate |
|---|---|
| Up to ₹4,00,000 | 0% |
| ₹4,00,001 – ₹8,00,000 | 5% |
| ₹8,00,001 – ₹12,00,000 | 10% |
| ₹12,00,001 – ₹16,00,000 | 15% |
| ₹16,00,001 – ₹20,00,000 | 20% |
| ₹20,00,001 – ₹24,00,000 | 25% |
| Above ₹24,00,000 | 30% |
One big change is that income up to ₹12 lakh is effectively tax-free for many salaried people because of the increased standard deduction plus the enhanced rebate under Section 87A.
Section 87A Rebate Changes
- Under the new regime beginning FY 2025-26, salaried residents with taxable income up to ₹12,00,000 are eligible for a rebate under Section 87A. This means the tax liability for them can be reduced to zero once standard deduction etc. are applied.
- Note: This excludes income from “special rates” (for example certain capital gains). Such income may still be taxed even if total income is under the ₹12 lakh threshold.
Deductions that Still Matter
While many popular exemptions / deductions are not allowed under the new regime, a few still remain relevant:
- Standard Deduction: Salary and pensioners get ₹75,000 standard deduction under the new regime.
- Employee Provident Fund (EPF) contributions: Your contribution towards EPF (usually 12% of Basic + DA) continues to reduce your take-home though under new regime it doesn’t give additional exemption beyond what is built-in.
- Professional tax / State specific deductions: State laws might impose professional tax which is deducted before arriving at in-hand salary.
EPF Interest, Contribution & Other Statutory Deductions
- The EPF interest rate for FY 2024-25 has been ratified at 8.25% per annum.
- Employee PF contribution is commonly 12% of basic salary + DA. In some cases (for establishments with fewer than 20 employees or in certain sectors) it is lower.
- Employer PF contribution does not reduce your monthly take-home, but it contributes to your total CTC and future benefits.
Step-by-Step Guide to Calculating Take-Home Salary
Let’s go through how to compute your take-home salary for salaried employees under the latest rules. You can follow these steps for both new and old regimes and then compare which gives you more in hand.
Step 1: Start with CTC or Gross Salary
- CTC (Cost to Company) includes everything company spends on you: basic salary, allowances, employer’s contributions to PF/NPS, perks, etc.
- Gross Salary is the part of CTC you are promised before deductions from your side (employee PF, taxes etc.). For calculation, always begin with an annual or monthly gross salary figure.
Step 2: Break Down Your Salary into Components
List out each component of your gross salary. For example:
- Basic salary + DA
- HRA
- Transport / Special / Performance allowances
- Bonuses or variable pay
- Perks and reimbursements
You’ll also note employer PF / NPS contributions but these won’t reduce your in-hand directly, they affect your benefits and taxable income.
Step 3: Identify Exempt or Non-Taxable Allowances
Check which allowances are non-taxable or partially exempt. Common ones:
- HRA: exemption depends on actual rent paid, city classification, basic wage etc.
- Leave Travel Allowance (LTA): subject to conditions and proof of travel.
- Other reimbursements: medical, telephone etc., if policy rules are satisfied.
Subtract such exemptions from gross to reduce taxable income.
Step 4: Account for Statutory Deductions
After you’ve deducted non-taxable allowances, consider these mandatory or common deductions:
- Employee Provident Fund (PF): Usually 12% of Basic + DA. This is deducted from your salary every month.
- Professional Tax (PT): Levied by state governments in most states. The amount depends on your monthly salary bracket, and often caps at around ₹2,500 per year. (Zoho Payroll)
- Other Contributions: If applicable—like National Pension Scheme (NPS) if opted voluntarily beyond employer contributions, employee-state insurance (in case of specified industries), etc.
Tip: You can find your exact PF figure on your payslip. Professional tax varies by state; use a reliable source like your state’s tax portal or recent payroll documentation.
Step 5: Choose Your Tax Regime and Apply Deductions
Here’s how to proceed depending on the tax regime you pick:
New Tax Regime
- Standard Deduction: ₹75,000 (for salaried individuals and pensioners).
- Restricted Deductions: Employee’s contribution to PF and NPS remains relevant, but others like 80C, 80D, HRA exemptions are not allowed under the new regime.
Old Tax Regime
- Standard Deduction: ₹50,000 (unchanged for those opting old regime).
- Popular Deductions:
- Section 80C (e.g., investments in PPF, EPF, ELSS; limit ₹1.5 lakh).
- Section 80D (medical insurance premium).
- Section 24(b) (home loan interest for self-occupied property).
- Others: 80E (education loan interest), 80TTA (savings interest), etc.
Step 6: Compute Taxable Income and Income Tax
Once you have gross salary, subtract exemptions (like HRA), statutory deductions (PF, PT), and applicable deductions:
- Gross Salary – exemptions – deductions = Taxable Income
- Apply tax slab rates to taxable income (see table below)
- Add cess (4%) and surcharge, if applicable
- Subtract Section 87A rebate, if eligible
Tax Slabs for FY 2025-26 under both regimes:
| Regime | Taxable Income (₹) | Tax Rate | Notes |
|---|---|---|---|
| New Regime | Up to 4,00,000 | 0% | No tax up to this limit |
| 4,00,001 – 8,00,000 | 5% | ||
| 8,00,001 – 12,00,000 | 10% | ||
| 12,00,001 – 16,00,000 | 15% | ||
| 16,00,001 – 20,00,000 | 20% | ||
| 20,00,001 – 24,00,000 | 25% | ||
| Above 24,00,000 | 30% | ||
| Old Regime | Up to 2,50,000 (below 60) | 0% | For individuals below 60 yrs |
| 2,50,001 – 5,00,000 | 5% | ||
| 5,00,001 – 10,00,000 | 20% | ||
| Above 10,00,000 | 30% |
(Senior citizens have higher exempt limits under old regime as per Income Tax Department guidelines.)
Apply the tax rates to relevant income slabs. Then:
- Add Health and Education Cess: 4% of the tax
- Add Surcharge, if income exceeds ₹50 lakh or as per thresholds—rare in middle income examples.
Finally, if your taxable income (after deductions) is ≤ ₹12,00,000 under new regime, you can claim Section 87A rebate, bringing tax liability to zero. (ClearTax)
Step 7: Determine Take-Home Salary
Now, to arrive at annual take-home salary:
Take-Home (Annual) = Gross Salary − Employee PF − Professional Tax(state) − Estimated Income Tax(including cess & surcharge)Then, monthly take-home = Annual Take-Home ÷ 12 (if salary is distributed evenly, else proportionally).
State-Wise Professional Tax: What You Should Know
Some states levy Professional Tax, which directly reduces your monthly in-hand salary. Understanding this helps in accurate take-home calculation:
- Applicable in most states; some waive below certain incomes
- Ceiling of ₹2,500 annually in most scenarios. (Zoho Payroll)
- Example slabs:
- Karnataka: Nil up to ₹25,000/month; ₹200 thereafter monthly.
- Maharashtra: Varies by gender and income; up to ₹10,000 often nil, then ₹175–₹200 for most months, and ₹300 for last month.
- West Bengal: Small amounts like ₹110–₹200, depending on bracket. (GoDigit)
That completes the detailed methodology for calculation, covering statutory deductions, choosing regimes, computing tax and arriving at take-home salary.
Account for Statutory Deductions
After breaking down your salary and identifying exemptions, you need to subtract the mandatory statutory deductions:
- Employee Provident Fund (EPF): Generally 12% of Basic + DA is deducted from your salary. This goes into your EPF account and earns interest at 8.25% (FY 2024-25) as approved by EPFO (EPFO official update).
- Professional Tax: Levied by some states, such as Maharashtra, Karnataka, and West Bengal. The amount is small (ranging from ₹100–₹200 per month) but must be considered as it directly reduces take-home. (vakilsearch.com)
- Other deductions: If you contribute to a company-offered insurance scheme or voluntary NPS contributions, these will also appear on your payslip.
These deductions reduce your gross to arrive at net taxable income.
Choose Tax Regime & Apply Deductions
At this point, you choose whether to stay in the old regime or adopt the new regime.
Old Regime Path
- Apply standard deduction (₹50,000).
- Claim deductions such as Section 80C (up to ₹1.5 lakh) for EPF, ELSS, PPF etc., 80D for health insurance, and 24(b) for home loan interest.
- Subtract these from your taxable income to lower your tax liability.
New Regime Path
- Apply standard deduction (₹75,000).
- No major deductions (like 80C or 80D) are available beyond this.
- Simpler to calculate, but usually better only if you don’t have significant investments or deductions to claim.
Compute Taxable Income and Income Tax
After deductions, you arrive at taxable income. Now apply the relevant tax slab rates depending on the regime you selected.
- Under the new regime, the slabs start at ₹4 lakh (0% up to this limit) and step up progressively.
- Under the old regime, slabs remain at the earlier structure, but you benefit from deductions.
Don’t forget:
- Rebate under Section 87A: In FY 2025-26, if your taxable income (new regime) is up to ₹12,00,000, the rebate can reduce your tax liability to zero.
- Health and Education Cess: A 4% cess is applied on the final income tax payable.
- Surcharge: For high incomes above ₹50 lakh, surcharge rates apply (10%–37% depending on income brackets, as per Income Tax Department).
Arrive at Take-Home Salary
Finally, subtract the following from your gross:
- Employee contributions (PF, professional tax, other statutory deductions).
- Income tax payable (after deductions, rebate, cess, surcharge).
What remains is your annual take-home salary. Divide by 12 to get your monthly in-hand salary.
Example Flow (Simplified)
Let’s take an employee with a gross annual salary of ₹12,00,000:
| Component | Amount (₹) |
|---|---|
| Gross Salary | 12,00,000 |
| Employee PF (12% of basic assumed at 40% of gross = ₹4,80,000) | 57,600 |
| Professional Tax (assume ₹2,400 annually) | 2,400 |
| Taxable Income after deductions (new regime, ₹75,000 standard deduction) | 11,42,400 |
| Income Tax (before rebate) | 57,120 |
| Rebate (87A) | 57,120 |
| Final Tax Payable | 0 |
| Annual Take-Home | 12,00,000 – 57,600 – 2,400 = 11,40,000 |
| Monthly Take-Home | 95,000 |
This illustrates how under the new regime with the updated rebate, a ₹12 lakh salary can result in zero income tax, with only PF and professional tax reducing take-home.
At this stage, we’ve fully covered the step-by-step calculation process.
Next, I’ll continue with examples and case studies for different income levels, showing detailed comparisons between old and new regimes.
Examples & Case Studies
Seeing numbers in action helps clarify how take-home salary differs by income, regime, and deductions. Below are three case studies with realistic assumptions. All data reflect FY 2025-26 / Assessment Year 2026-27 rules.
Example 1: Lower Income (CTC = ₹6,00,000/year)
Assumptions:
- Gross annual salary = ₹6,00,000
- Basic + DA = 40% of gross = ₹2,40,000
- HRA, transport, other allowances = rest, no large taxable perks
- Employee PF contribution = 12% of (Basic + DA) = ₹28,800 per annum
- Professional tax = assume in a state with monthly PT ≈ ₹2,400 per annum
- Using new regime vs old regime (with minimal deductions under old regime, say only standard deduction + PF)
| Item | New Regime | Old Regime |
|---|---|---|
| Gross Annual Salary | ₹6,00,000 | ₹6,00,000 |
| Standard Deduction | ₹75,000 | ₹50,000 |
| PF Deduction (employee share) | ₹28,800 | ₹28,800 |
| Other Deductions (80C etc.) | Not allowed | Assume ₹50,000 in 80C etc. |
| Taxable Income | ~ ₹4,96,200 | ~ ₹4,71,200 |
| Income Tax Before Rebate / Surcharge | [using new regime slab] ~ ₹9,810 | [old regime slab] ~ ₹4,560 plus higher slabs if applicable |
| Section 87A Rebate | Applicable (income below threshold) → Tax = 0 | Applicable → Tax = 0 |
| Take-Home Salary (Annual) ≈ | ₹6,00,000 − PF − PT − Tax = ~ ₹5,68,800 | Similarly ~ ₹5,69,000 |
Interpretation:
For this salary level, both regimes give nearly the same result because deductions are small and the rebate under Section 87A wipes out tax liability. The new regime is simpler here.
Example 2: Middle Income (CTC = ₹15,00,000/year)
Assumptions:
- Gross annual salary = ₹15,00,000
- Basic + DA = 40% = ₹6,00,000
- Other allowances & HRA etc. = ₹9,00,000
- Employee PF = 12% of (Basic + DA) = ₹72,000 per annum
- Professional tax = assume ₹2,400
- Old regime deductions: standard deduction, PF, 80C limit full ₹1,50,000, health insurance (80D) ₹25,000, home loan interest ₹2,00,000, etc.
| Item | New Regime | Old Regime |
|---|---|---|
| Gross Annual Salary | ₹15,00,000 | ₹15,00,000 |
| Standard Deduction | ₹75,000 | ₹50,000 |
| PF (employee) | ₹72,000 | ₹72,000 |
| Additional Deductions (80C, 80D etc.) | None beyond what new regime allows | Assume ~ ₹2,00,000 total |
| Taxable Income | ≈ ₹13,33,000 | ≈ ₹12,28,000 |
| Income Tax Before Rebate / Surcharge | Using new regime: apply slabs → about ₹1,18,375 | Old regime: somewhat higher, perhaps ₹1,95,000 before rebate etc. |
| Rebate (87A) | Not applicable (income exceeds ₹12,00,000 threshold) | Not applicable |
| Surcharge / Cess | As per applicable rate; cess of 4% applies | Same |
| Take-Home Salary (Annual) ≈ | Gross − deductions − tax = ~ ₹13,00,000 | Gross − tax & deductions = ~ ₹12,00,000 (approx) |
Interpretation:
Here, old regime (with large deductions available) may give you better in-hand in some situations, depending on how many deductions you actually claim.
Example 3: High Income (CTC = ₹40,00,000/year)
Assumptions:
- Gross annual salary = ₹40,00,000
- Basic + DA = 40% = ₹16,00,000
- Other allowances etc. = ₹24,00,000
- Employee PF = 12% of (Basic + DA) = ₹1,92,000
- Professional tax = maybe ₹2,400 or higher depending on state
- Old regime deductions: max 80C, 80D, home loan, etc.
| Item | New Regime | Old Regime |
|---|---|---|
| Gross Annual Salary | ₹40,00,000 | ₹40,00,000 |
| Standard Deduction | ₹75,000 | ₹50,000 |
| PF Employee | ₹1,92,000 | ₹1,92,000 |
| Deductions under old regime | None under new; under old assume ~ ₹3,50,000 total (80C, 80D, home loan interest etc.) | |
| Taxable Income | ~ ₹37,33,000 | ~ ₹34,58,000 |
| Income Tax Before Surcharge / Cess (New Regime) | Computed via slabs: higher slabs → likely several lakhs of rupees | Under old regime somewhat lower due to deductions |
| Surcharge | If income > ₹50 lakh etc., surcharge applies; here ₹40 lakh so possibly in lower surcharge bracket (depending on regime) | Same |
| Approx Take-Home Annual | ≈ ₹29-30 lakh (after all deductions, tax, PF, others) | ≈ ₹30-31 lakh (maybe slightly higher if many deductions claimed) |
Interpretation:
At high income levels, the benefit of old regime’s deductions tends to increase take-home, but the new regime could be competitive if you do not have large allowable deductions, or if those deductions are hard to document.
Additional Important Details
Section 87A & “Zero Tax” Threshold
A very recent change (Budget 2025) has increased the rebate under Section 87A so that in many cases, an individual with taxable income up to ₹12,00,000 under the new regime ends up with zero income tax liability. Because of the standard deduction (₹75,000) and the rebate, salaried persons earning up to approx ₹12.75 lakh (gross before deductions) may effectively pay no tax. However, special incomes like capital gains / winnings etc. may be excluded.
That wraps the illustrative examples showing how take-home salary varies by income group, regime, and deductions.
Tools & Resources
Using online calculators and official sources can greatly simplify figuring out your take-home salary. Here are trusted resources, what you get from them, and what inputs you’ll need.
| Resource | What It Offers | When to Use / Key Features |
|---|---|---|
| Income Tax Department’s e-Filing Portal | Official “Income & Tax Calculator” tool that computes tax under both old and new regimes. Updated with the latest Finance Act. | Use this to verify your computation, especially for filing ITR. Very reliable source. |
| ClearTax Salary & Tax Calculator | Lets you model deductions, compare regimes, see the impact of allowances / exemptions. Reflects FY 2025-26 slabs. | Good for “what-if” scenarios (e.g. “If I invest more under 80C, what happens?”). |
| Groww Income Tax Calculator | Shows tax liability after budget changes, helps distinguish old vs new regime. Easy interface. | |
| Bank / Finance Apps (IDFC FIRST, ICICI etc.) | Many provide calculators where you input income, investments, salary components. Useful for quick checks. |
What Inputs You Should Have Ready
Before using any tool or calculating manually, prepare:
- Gross annual salary or CTC
- Break-up of salary components (Basic, HRA, Special Allowances, Bonuses)
- Rent paid (if claiming HRA exemption) and whether you live in a metro / non-metro city
- Details of deductions/exemptions you can claim: EPF, 80C investments, health insurance (80D), home loan interest etc.
- Whether your employer deducts professional tax in your state, and how much
These will make the calculation accurate; missing one allowance or deduction might shift your take-home significantly.
Key Takeaways for Calculating Take-Home Salary
Understanding how to calculate take-home salary in India is essential for financial planning. Here are the main points to remember:
- CTC is not equal to in-hand. Employer contributions and perks are part of CTC but don’t come to your account directly.
- Gross salary forms the starting point, from which deductions (PF, professional tax, income tax) are subtracted.
- Tax regimes matter. The new regime (with ₹75,000 standard deduction and enhanced Section 87A rebate) makes income up to ~₹12.75 lakh tax-free for many salaried individuals. The old regime may still be better for those with higher deductions like housing loan interest or large 80C investments.
- EPF and professional tax reduce your monthly pay. These must always be included in your estimate of take-home.
- Income level decides which regime is better. Lower salaries (below ₹12 lakh) often benefit from the new regime; higher salaries with deductions might see better results under the old.
Common Mistakes to Avoid
When people try to calculate take-home salary, they often:
- Assume CTC is equal to take-home, ignoring deductions.
- Forget to include cess (4%) on income tax.
- Miss professional tax in states where it applies.
- Overestimate HRA exemption without checking rules for metro vs non-metro.
- Ignore that some perks (like meal vouchers or company car benefits) may still be partly taxable.
Double-checking your numbers with official calculators such as the Income Tax Department’s tool can help prevent mistakes.
Who Should Pay Extra Attention?
- Job seekers: Always evaluate offers based on take-home, not CTC.
- Mid-career professionals: Compare old vs new regime each year to avoid overpaying tax.
- High earners: Plan for surcharge and optimize deductions like NPS, 80D, or home loan interest.
- Senior citizens: Benefit from higher basic exemption under old regime; consider carefully before switching to the new.
Final Thoughts
Calculating your take-home salary in India is no longer as simple as checking your gross pay. With two tax regimes, evolving rebate rules, and statutory deductions, the difference between CTC and what you actually receive can be significant.
The smartest approach is:
- Break down your salary components.
- Compute your taxable income under both regimes.
- Apply deductions, rebate, cess, and professional tax.
- Compare results to see which gives you a higher in-hand salary.
Conclusion & Next Steps
Your take-home pay is what truly matters for budgeting, saving, and investing. By understanding salary structure, knowing the latest income tax rules, and using official calculators, you can confidently estimate your in-hand amount.
If you’re planning a job switch or negotiating with HR, always ask for a salary break-up and calculate how much you will actually receive. You can try free calculators from platforms like Groww or ClearTax to quickly compare scenarios.
Next step: Once you’ve calculated your take-home salary, plan how to allocate it across essential expenses, savings, and investments. This ensures your income works for you, not just today, but for your long-term financial goals.
FAQ
What is the difference between CTC, gross salary, and take-home salary?
CTC (Cost to Company) includes everything your employer spends on you, including employer contributions and benefits. Gross salary is what you’re promised before your deductions. Take-home salary is what you receive after deducting taxes, PF, professional tax, and other deductions.
Which tax regime is better: old or new?
The new regime offers simpler calculations with lower compliance and fixed standard deduction of ₹50,000. The old regime may be better if you have many deductions (80C, home loan interest, insurance etc.). You should compare both for your income level and deductions.
How much income is tax-free under the new regime for FY 2025-26?
Under the new regime, the basic exemption limit is ₹3,00,000. Salaried taxpayers also get a standard deduction of ₹50,000. Additionally, Section 87A rebate ensures that if your taxable income is up to ₹12,00,000, you pay zero tax. This means a gross salary of about ₹12.5 lakh can still be tax-free.
Do I have to pay income tax under new regime if my salary is ₹10 lakh?
No. With a salary of ₹10 lakh, after the standard deduction of ₹50,000, your taxable income becomes ₹9.5 lakh. This is below the ₹12 lakh rebate limit under Section 87A, so your tax liability becomes zero under the new regime.
Are allowances like HRA and LTA exempt from tax?
Allowances like HRA (House Rent Allowance) and LTA (Leave Travel Allowance) are exempt only under the old regime if conditions are met (rent paid, travel proofs, city type etc.). In the new regime, most exemptions including HRA and LTA are not available, and such allowances are fully taxable.
Can I switch between old and new tax regimes any time?
Yes. Salaried individuals can choose between the old and new regime every assessment year while filing their income tax return. It is advisable to compute both options and pick the one that results in higher take-home pay.
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