India taxes salary under the new regime by default (FY 2025-26 / AY 2026-27 — Budget 2026 made no changes). Income up to ₹12 lakh is effectively tax-free for residents via the Section 87A rebate. On top of tax, employees pay EPF at 12% of Basic+DA (ceiling raised to ₹25,000/month from 17 September 2026), ESI at 0.75% if monthly wages are ₹21,000 or less, and state professional tax (max ₹2,500/year).
Estimates only — not tax advice. Results are computed from official 2026 tax rules; always verify important decisions with the relevant tax authority.
Step 1 — Enter your annual gross salary in ₹ (your yearly CTC salary portion).
Step 2 — Enter your monthly Basic + DA. EPF is 12% of this figure, capped at ₹25,000/month — the single biggest lever on your in-hand pay.
Step 3 — Pick your state for professional tax (Maharashtra ₹2,500/yr, Karnataka ₹2,400/yr).
Step 4 — Confirm residency. The 87A rebate that zeroes tax up to ₹12 lakh applies to resident individuals only.
India’s new-regime slabs (FY 2025-26) apply after the ₹75,000 standard deduction for salaried employees:
| Taxable income | Rate |
|---|---|
| ₹0 – 4,00,000 | Nil |
| ₹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% |
Section 87A rebate: residents with taxable income up to ₹12,00,000 get a rebate up to ₹60,000 — wiping tax to zero. Just above ₹12 lakh, marginal relief caps your tax at the amount by which you exceed ₹12 lakh (breakeven around ₹12,70,588). Then add the 4% health & education cess; surcharge (10–25%) only kicks in above ₹50 lakh.
EPF: 12% of Basic+DA from you (employer adds 12% plus admin charges). The wage ceiling rose from ₹15,000 to ₹25,000/month on 17 September 2026 — the first rise since 2014 — so the maximum employee share is now ₹3,000/month. ESI: 0.75% employee / 3.25% employer, only if monthly wages are ₹21,000 or less (₹25,000 for disabled employees). Professional tax: state-wise, capped at ₹2,500/year.
Example 1 — ₹1,50,000/month = ₹18,00,000/year (new regime, Maharashtra): taxable = 18,00,000 − 75,000 = ₹17,25,000. Tax = 5% × 4L + 10% × 4L + 15% × 4L + 20% × 1.25L = ₹1,45,000; +4% cess = ₹1,50,800/year (₹12,567/month). EPF ₹3,000 (ceiling), PT ₹2,500/year. In-hand ≈ ₹1,34,225/month.
Example 2 — ₹1,00,000/month = ₹12,00,000/year (resident): taxable = ₹11,25,000 ≤ ₹12L → 87A rebate wipes out the ₹52,500 tax to zero. You pay only EPF + professional tax.
Example 3 — marginal relief: at ₹13,00,000/year, taxable ₹12,25,000 gives slab tax of ₹63,750 — but marginal relief caps it at the ₹25,000 excess over ₹12 lakh (then +4% cess).
1. Using the old ₹15,000 EPF ceiling. Since 17 September 2026 it’s ₹25,000 — old calculators understate EPF by up to ₹1,200/month.
2. Forgetting the 87A rebate needs residency. Non-residents don’t get the ₹12L zero-tax benefit.
3. Comparing CTC to in-hand. Employer EPF, gratuity accrual (~4.81% of Basic+DA) and insurance inside CTC never reach your bank account — always compare in-hand to in-hand.
| Applicable period | FY 2025-26 (AY 2026-27); EPF ceiling ₹25,000 from 17 Sep 2026 |
| Based on | Finance Act / Budget 2026 (new regime slabs, 87A); EPFO notification S.O. 5109(E); ESIC wage limits |
| Last verified | 24 October 2026 |
| Assumes | New regime; resident individual; salaried with standard deduction |
| Doesn’t cover | Old regime; HRA exemption; 80C/deductions; perquisites; surcharge detail above ₹50L (modelled at headline rates) |
Sources: Figures compiled from: Income Tax Dept, EPFO, ESIC.
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The new regime — the default for salaried employees since FY 2023-24. Budget 2026 made no changes to its slabs.
For resident individuals, yes: the Section 87A rebate (up to ₹60,000) zeroes out tax when taxable income is ₹12 lakh or less, after the ₹75,000 standard deduction.
The wage ceiling rose from ₹15,000 to ₹25,000/month effective 17 September 2026 — the first increase since 2014. Maximum employee EPF is now ₹3,000/month.
No. HRA exemption depends on your rent and city and isn’t modelled; nor are 80C deductions or perquisites.
📖 How salary deductions work in India — full guide
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