How it works
- Gross salary = CTC − employer’s PF (12% of basic + DA, on wages up to ₹25,000 a month if you choose the ceiling).
- New regime: taxable income = gross − ₹75,000 standard deduction. Tax at 0% up to ₹4 lakh, 5% to ₹8 lakh, 10% to ₹12 lakh, 15% to ₹16 lakh, 20% to ₹20 lakh, 25% to ₹24 lakh, 30% above. Rebate: full tax (up to ₹60,000) if income is up to ₹12 lakh.
- Old regime: taxable income = gross − ₹50,000 − professional tax − HRA exemption − section 123 savings (your PF included, capped at ₹1.5 lakh) − other deductions. Tax at 0% up to ₹2.5 lakh, 5% to ₹5 lakh, 20% to ₹10 lakh, 30% above. Rebate up to ₹12,500 if income is up to ₹5 lakh.
- Surcharge above ₹50 lakh (10%, 15%, 25%; 37% in the old regime above ₹5 crore) with marginal relief, then cess at 4%.
- In-hand = (gross − your PF − professional tax − income tax) ÷ 12.
Worked example
An accounts executive at Kaveri Agencies has a CTC of ₹12,00,000, basic 50% (₹50,000 a month), PF on the ₹25,000 ceiling, no other deductions.
- PF: 12% × ₹25,000 = ₹3,000 a month each from employer and employee → ₹36,000 a year.
- Gross salary: ₹12,00,000 − ₹36,000 = ₹11,64,000.
- New regime: taxable ₹10,89,000; slab tax ₹48,900; rebate ₹48,900 → tax nil. In-hand = (₹11,64,000 − ₹36,000) ÷ 12 = ₹94,000 a month.
- Old regime: taxable ₹11,64,000 − ₹50,000 − ₹36,000 = ₹10,78,000; tax ₹1,35,900 + 4% cess = ₹1,41,336; in-hand ₹82,222.
The new regime is better here by ₹1,41,336 a year.
Notes and edge cases
- Salary only. Other income, capital gains and losses change the picture.
- Employer NPS: under the new regime an employer’s contribution up to 14% of salary is deductible (section 124); not modelled here.
- Monthly TDS by your employer spreads the year’s tax over the remaining months, so it can differ month to month.
- Basic share of CTC drives PF; ask HR how your employer defines wages for PF.