Income Tax on Rs. 10 Lakh Salary

The income tax on 10 lakh is approximately Rs. 78,400 according to the old regime with deductions or Rs. 75,000 according to the new regime). Under Section 87A, taxable income below Rs. 7 lakh attracts zero tax in the new regime. Senior citizens pay lower. Tax-saving investments (80C/80D/NPS), HRA, LTA, and standard deduction (Rs. 50K) can slash liability.
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2 min read
05 September 2025

As the financial year 2023-2024 unfolds, individuals earning a salary of Rs. 10 lakh face important decisions regarding income tax. Understanding the tax slabs, deductions, and exemptions are crucial for optimising tax liability. In this article, we will explore the income tax implications under both the new and old tax regimes, along with deductions, exemptions, and the minimum deductions required for incomes exceeding Rs. 10 lakh.

Income tax slabs for FY 2025-2026 as per the new tax regime

The new tax regime, designed to simplify tax structures, offers lower tax rates but with fewer deductions. For individuals earning Rs. 10 lakh, the income tax slabs are as follows:

  • Up to Rs 4 lakh: Nil tax
  • Rs 4,00,001- Rs 8,00,000 : 5%
  • Rs 8,00,001 lakh - Rs 12,00,000 : 10%
  • Rs 12,00,001 lakh - Rs 16,00,000: 15%
  • Rs 16,00,001 lakh - Rs 8,00,000 : 20%
  • Rs 20,00,001 lakh - Rs 24,00,000 : 25%
  • Above Rs 24,00,001 : 30%

This implies that if your annual income is Rs. 10 lakh, you fall within the 10% tax bracket under the new regime.

Income tax slabs for FY 2024-2025 as per the old tax regime

For those opting to stay with the old tax regime, which provides more deductions and exemptions, the slabs are:

  • Up to Rs. 2.5 lakh: Nil
  • Rs. 2,50,001 to Rs. 5,00,000: 5%
  • Rs. 5,00,001 to Rs. 7,50,000: 10%
  • Rs. 7,50,001 to Rs. 10,00,000: 15%

Comparing the two regimes, individuals earning Rs. 10 lakh might find the old tax regime advantageous due to the higher deduction options.

New income tax regime and old tax regime

Net annual income

 Old tax regime New tax regime

Up to Rs. 2.5 lakh

Nil

Nil

Rs. 2.5 lakh – Rs. 4 lakh

5%

Nil

Rs. 4 lakh – Rs. 5 lakh

5%

5%

Rs. 5 lakh – Rs. 8 lakh

20%

5%

Rs. 8 lakh – Rs. 10 lakh

20%

10%

Rs. 10 lakh – Rs. 12 lakh

30%

10%

Rs. 12 lakh – Rs. 16 lakh

30%

15%

Rs. 16 lakh - Rs. 20 lakh

30%

20%

Rs. 20 lakh - Rs. 24 lakh

30%

25%

More than Rs. 24 lakh

30%

30%

 

How to calculate income tax on Rs. 10 lakh salary?

  1. Determine gross income: Start with your total salary, which is Rs. 10 lakh
  2. Claim deductions: Use deductions under Section 80C, up to Rs. 1.5 lakh, if applicable.
  3. Calculate taxable income: Subtract deductions from your gross income (Rs. 10 lakh - Rs. 1.5 lakh = Rs. 8.5 lakh).
  4. Refer to tax slabs: Use applicable tax slabs to calculate your tax liability.
  5. Use an income tax calculator for precise calculations and to simplify the process.

Understanding salary structure

Various tax-exempt allowances may be a part of your salary component. Your taxable income is the remaining salary.

Particular

Amount 

Gross salary u/s 17(1)

XXXX

Less: exemption u/s 10

 

HRA exemption

XXXX

LTA exemption

XXXX

Reimbursement

XXXX

Children's education and hostel allowance

XXXX

Less: Deduction u/s 16

 

Standard deduction

XXXX

Income under the head salary

XXXX

Less: Deduction under Chapter VI-A

 

Section 80C

XXXX

Net total income

XXXX

Thus, tax savings can be maximised through exemptions and deductions. However, keep in mind that most of the deductions are available only in the old tax regime.

Deductions and exemptions under new tax regime

Under the new tax regime, and exemptions are limited. However, taxpayers can still claim deductions under Section 80CCD (2) for an employer's contribution to the National Pension Scheme (NPS).

Here are some key points regarding deductions and exemptions under the new tax regime:

  1. Standard deduction:
    The new tax regime provides a standard deduction of Rs. 50,000 for salaried and pensioned individuals.
  2. Deductions under Section 80CCD (2):
    Taxpayers can claim deductions for the employer's contribution to the National Pension Scheme (NPS) under Section 80CCD (2).
  3. Other deductions and exemptions:
    Most traditional exemptions and deductions available under the old tax regime, such as House Rent Allowance (HRA), Leave Travel Allowance (LTA), and deductions under Sections 80C (like Provident Fund contributions, life insurance premiums, etc.), are not available in the new tax regime.
  4. No exemptions for allowances:
    Various allowances like transport allowance, medical reimbursement, and other exemptions that were available in the old regime are not applicable in the new regime.
  5. Taxpayers' choice:
    Taxpayers have the flexibility to choose between the new and old income tax regime based on their individual financial situations. While the new regime offers lower tax rates, the old regime provides more deductions and exemptions, allowing taxpayers to reduce their taxable income.

Deductions and exemptions under old tax regime

Part I - Exemptions

Your salary structure can be determined from the CTC, which typically looks like this:

Salary component

Taxability

Basic 

Fully-taxable

Dearness Allowance 

Fully-taxable

House Rent Allowance (HRA)

Exempt up to a certain limit. Calculate now

Leave Travel Allowance (LTA)

Actual travel ticket expenses are exempt for two trips in 4 years under 10(5). Read more

Mobile/ Internet reimbursement 

Exempt if:

– used predominantly for office purposes – proofs/bills submitted

Children's education and hostel allowance

Rs. 4800 per child (max 2 children)

Food

Rs. 50 per meal (max 2 meals a day)

Annual = Rs. 26,400 (50*2*22 days*12 months)

Professional tax

Generally, Rs 2,400 (Varies from state to state)

 

Part II - Deductions

When planning your taxes for a salary above Rs. 10 lakh, here are the deductions you can expect:

Salary component

Taxability

Basic 

Fully-taxable

Dearness Allowance 

Fully-taxable

House Rent Allowance (HRA)

Exempt up to a certain limit. Calculate now

Leave Travel Allowance (LTA)

Actual travel ticket expenses are exempt for two trips in 4 years under 10(5). Read more

Mobile/ Internet reimbursement 

Exempt if:

– used predominantly for office purposes – proofs/bills submitted

Children's education and hostel allowance

Rs. 4800 per child (max 2 children)

Food

Rs. 50 per meal (max 2 meals a day)

Annual = Rs. 26,400 (50*2*22 days*12 months)

Professional tax

Generally, Rs 2,400 (Varies from state to state)

Paying health insurance policy

Self, your spouse, and your dependent children: 

Premium 

Rs 25,000 (Rs 50,000 if aged 60 and above)

(Section 80D)

Parents: Rs 25,000 (Rs 50,000 if aged 60 and above)

Opting for an education loan (Section 80E)

Interest deduction for 8 years from the year of repayment of loan taken for the higher education of yourself, your spouse, dependent children, or a student of whom you are the legal guardian

Donating to charity (Section 80G)

50% or 100% of the eligible amount for notified institutions.

Investing in tax saving instruments

Tax benefit of Rs.1,50,000 per year. You can invest in the following options:

(Section 80C)

– Employees’ Provident Fund (EPF)

 

– Public Provident Fund (PPF)

 

– Equity Linked Saving Scheme funds (ELSS)

 

– Home loan repayment and Stamp duty

 

– Sukanya Smriddhi Yojana (SSY)

 

– National Savings Certificate (NSC)

 

– Fixed Deposit for 5 years, and more

Costs to treat disabled dependents (Section 80DD)

If you have disabled dependents for whom you bear 

medical expenses, you are eligible for the tax relief: 

– 40% disability: Rs.75,000

– 80% or severe disability: Rs.1,25,000

Deductions on home loan payments

Principal amount: Upto Rs 1.5 lakhs u/s 80C

Interest amount: Upto Rs 2 lakhs paid under section 24b  

The maturity amount of a Life Insurance Policy

Maturity proceeds are tax-exempt if the sum assured is ≤:

– 20%: policies issued before 1 April 2012

– 10%: policies issued after 1 April 2012

– 15%: policies issued after 1 April 2013 for a person with disability or disease.

– Exemption is applicable in case of ULIP only if the annual premium does not exceed Rs 2,50,000 (From 1st April 2021)

– Exemption is applicable in case of Life insurance other than ULIP only if the annual premium does not exceed Rs. 5,00,000 (From 1st April 2023 onwards)

Standard deduction

Rs 50,000 (Will be given to all without any restrictions)



Minimum deduction required if income is more than Rs. 10 lakh

When your income exceeds Rs. 10 lakh, exploring deductions becomes essential to optimise your tax liability. Here are some common deductions that individuals can consider if their income surpasses Rs. 10 lakh:

  1. Section 80C deductions:
    Individuals can claim deductions under Section 80C for various investments and expenses, including contributions to the Employees' Provident Fund (EPF), Public Provident Fund (PPF), Equity-Linked Savings Scheme (ELSS), National Savings Certificates (NSC), and payment of life insurance premiums.
  2. Home loan interest (Section 24(b)):
    If you have a home loan, the interest paid on the loan is eligible for deduction under Section 24(b) of the Income Tax Act. This deduction is available for both self-occupied and let-out properties.

    Planning to purchase your dream home with a tax-efficient loan? A home loan from Bajaj Finserv offers competitive interest rates starting from 7.45%* p.a and allows you to claim substantial tax benefits on both principal and interest components. Check your eligibility for a home loan from Bajaj Finserv today. You may already be eligible, find out by entering your mobile number and OTP.
  3. Health insurance premiums (Section 80D):
    Deductions can be claimed under Section 80D for premiums paid towards health insurance policies for yourself, your spouse, children, and parents. The deduction limit depends on the age of the insured individuals.
  4. National Pension Scheme (NPS) (Section 80CCD):
    Apart from the employer's contribution, individuals can also claim deductions for their contributions to the National Pension Scheme (NPS) under Section 80CCD.
  5. Education loan interest (Section 80E):
    If you have taken an education loan for yourself, your spouse, or children, the interest paid on the loan is eligible for deduction under Section 80E.
  6. Standard deduction:
    In the new tax regime, there is a standard deduction of Rs. 50,000 available for salaried and pensioned individuals.
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How to save taxes for Rs. 10 lakh salary?

If your annual income is around Rs. 10 lakh, there are several ways you can legally reduce your tax liability. The Income Tax Act provides different deductions, rebates, and exemptions that can help you retain more of your earnings. The strategy you adopt will depend on whether you choose the old regime (which allows multiple deductions and exemptions) or the new regime (which offers lower slab rates but limited deductions). Below are some of the key ways to save tax:

1. Claim standard deduction

One of the easiest ways to reduce taxable income is by making use of the standard deduction. This benefit is automatically available to salaried individuals without needing to submit proofs of investment.

New regime: Rs. 75,000 deduction available from FY 2025-26.

Old regime: Rs. 50,000 deduction available.

This deduction reduces your taxable salary directly and is a straightforward way to save.

2. Rebate under Section 87A

The rebate under Section 87A is another important relief for individuals in lower to mid-income groups.

Old regime: Income up to Rs. 5 lakh qualifies for a full rebate (tax-free).

New regime (FY 2024-25): Income up to Rs. 7 lakh qualifies.

From FY 2025-26: The rebate limit has been increased to Rs. 12 lakh under the new regime.

This means that from FY 2025-26, a taxpayer with an annual income of up to Rs. 12 lakh will not need to pay any income tax under the new regime, unless the income comes from special categories such as capital gains or betting.

3. Choose the right tax regime

The choice of regime is crucial.

Old regime: Basic exemption limit is Rs. 2.5 lakh, but it offers several deductions such as HRA, LTA, 80C investments, 80D for medical insurance, and others.

New regime (FY 2025-26 onwards): Exemption up to Rs. 4 lakh, fewer deductions, but simpler slab rates.

Taxpayers should compare their total deductions under the old regime against the lower slab rates of the new regime to see which results in lower liability.

4. Employer’s contribution to NPS (Section 80CCD(2))

If your employer contributes to the National Pension Scheme (NPS), you can claim this deduction in both regimes.

Government employees: Up to 14% of basic + DA is deductible.

Other employees: 10% under old regime, 14% under new regime.

This can be a significant tax-saving tool for those eligible.

5. Tax-free gifts

Gifts received in cash or kind are exempt up to Rs. 50,000 in a financial year. Anything above this amount becomes fully taxable. This exemption is applicable under both regimes.

6. Deduction on interest for let-out property

If you have rented out a residential or commercial property, you can claim a deduction on the interest paid on the loan taken for its purchase or construction. Unlike self-occupied property, there is no upper limit for such deductions.

7. Gratuity and leave encashment

At the time of retirement or resignation, gratuity and leave encashment received are exempt up to a certain limit prescribed under the Income Tax Act. These exemptions apply under both tax regimes.

8. Deduction for hiring additional employees

Section 80JJA allows a deduction of 30% of additional employee cost. This is especially useful for business owners and start-ups and is available in both regimes.

9. Agniveer Corpus Fund deduction

Individuals enrolled in the Agnipath Scheme can claim deductions for contributions made by the government towards their Agniveer Corpus Fund under Section 80CCH(2). The entire contribution is deductible with no upper cap.

By making use of these deductions and exemptions and carefully choosing between the old and new regime, you can significantly reduce or even eliminate your tax liability on a Rs. 10 lakh salary.

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Example on calculation of tax under new and old tax regime

Scenario: Mr. Ashok’s salary structure

Mr. Ashok earns Rs. 10,00,000 annually. His benefits and deductions include:

  • HRA exemption: Rs. 1,50,000

  • LTA: Rs. 40,000

  • Children’s education allowance: Rs. 9,600

  • Professional tax: Rs. 2,400

  • Investments: Rs. 1.5 lakh in PPF (80C), Rs. 50,000 medical insurance (80D), Rs. 55,000 education loan interest (80E).

FY 2025-26 tax calculation

Particulars

Old regime

New regime

Gross Salary

10,00,000

10,00,000

Less: HRA

-1,50,000

X

LTA

-40,000

X

Children’s allowance

-9,600

X

Standard deduction

-50,000

-75,000

Professional tax

-2,400

X

taxable salary

7,48,000

9,25,000

Less: 80C (PPF)

-1,50,000

X

Less: 80D (Mediclaim)

-50,000

X

Less: 80E (Education Loan)

-55,000

X

Net taxable income

4,93,000

9,25,000

Tax payable (before rebate)

12,150

32,500

Rebate u/s 87A

-12,150

-32,500

Final tax liability

0

0

FY 2024-25 tax calculation

Particulars

Old regime

New regime

Net taxable income

4,93,000

9,25,000

Tax payable

12,150

42,500

Rebate u/s 87A

-12,150

X

Final tax liability

0

44,200

Key observation

  • In FY 2024-25, choosing the old regime results in zero tax liability, while the new regime leads to a liability of Rs. 44,200.

  • From FY 2025-26 onwards, thanks to the increased rebate under Section 87A (up to Rs. 12 lakh), both regimes will result in zero tax for a Rs. 10 lakh salary.

This demonstrates why selecting the right regime each year is important for maximising tax savings.

Looking to further reduce your tax burden through property investment? A home loan from Bajaj Finserv not only helps you own property but also provides significant tax advantages that could complement your current tax planning strategy. Check your eligibility for a home loan from Bajaj Finserv to explore additional tax-saving opportunities. You may already be eligible, find out by entering your mobile number and OTP.

Other topics you might find interesting

Income Tax Notice Section 142 1​

Section 194h of Income Tax Act

Section 80dd of Income Tax Act

Section 80ccd 1 of Income Tax Act

Section 148 of Income Tax Act

Section 80ggc of Income Tax Act

Section 80ddb of Income Tax Act

Section 80e of Income Tax Act

Home Loan Interest Deduction

Section 80ccd 1b of Income Tax Act

Section 80g of Income Tax Act

 


Calculate income taxes based on different salary amount

Here’s a quick look at income tax liabilities for various salary brackets under the new regime:

Salary Amount

New Tax Regime - Income Tax Amount (Approximate)

Old Tax Regime - Income Tax Amount (Approximate)

Rs. 7 lakh

Rs. 11700

Rs. 12,500

Rs. 10 lakh

Rs. 33800

Rs. 1,00,000

Rs. 12 lakh

Rs. 54600

Rs. 1,50,000

Rs. 15 lakh

Rs. 97500

Rs. 1,80,000


Understanding your tax liability can help you plan better for your finances. For a comprehensive breakdown of income tax rates and deductions, consider using a tax calculator to simplify the process.

Take your financial planning to the next level by investing in property. A home loan from Bajaj Finserv offers loans up to Rs. 15 Crore* with flexible tenure options up to 32 years, making homeownership achievable even with a Rs. 10 lakh salary. Check your eligibility for a home loan from Bajaj Finserv and secure your financial future. You may already be eligible, find out by entering your mobile number and OTP.

Popular calculators for your financial calculations

Home Loan Calculator

Home Loan Tax Benefit Calculator

Stamp Duty Calculator

Home Loan Eligibility Calculator

Home Loan Prepayment Calculator

 

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Frequently asked questions

What is the income tax rate for individuals earning more than Rs. 10 lakh in a year in India?

For the financial year 2023-2024, individuals earning more than Rs. 10 lakh fall under the 15% tax bracket in the new tax regime.

What are tax deductions, and how can they help in reducing my tax liability?

Tax deductions are allowances that reduce your taxable income, thus lowering your tax liability. They include investments, insurance premiums, and other eligible expenses.

Can I claim deductions under Section 80C if my income is above Rs. 10 lakh?

Yes, individuals with an income above Rs. 10 lakh can still claim deductions under Section 80C for various investments.

Are there any tax-saving investment options beyond Section 80C for high-income earners?

Yes, high-income earners can explore deductions under Sections like 80D for health insurance premiums, 24(b) for home loan interest, and 80CCD (2) for employer's contribution to NPS in the new tax regime.

Can I claim deductions for my children’s education expenses if my income exceeds Rs. 10 lakh?

While there are no specific deductions for children's education expenses, you can explore exemptions for tuition fees under Section 80C or education loans under Section 80E, irrespective of your income.

How much tax do I pay on 10 lakhs?

As of the fiscal year 2025-26, the Indian government has revised income tax slabs under the new tax regime. For an annual income of Rs. 10 lakh, the applicable tax rates are as follows:​

  • Up to Rs. 4,00,000: No tax​ Reuters
  • Rs. 4,00,001 to Rs. 8,00,000: 5%​
  • Rs. 8,00,001 to Rs. 10,00,000: 10%​

Tax Calculation:

  1. First Rs. 4,00,000: No tax​
  2. Next Rs. 4,00,000 (Rs. 4,00,001 to Rs. 8,00,000): 5% of Rs. 4,00,000 = Rs. 20,000​
  3. Remaining Rs. 2,00,000 (Rs. 8,00,001 to Rs. 10,00,000): 10% of Rs. 2,00,000 = Rs. 20,000​

Total Tax Payable: Rs. 20,000 + Rs. 20,000 = Rs. 40,000​

Therefore, on a Rs. 10 lakh annual income, the total tax liability is Rs. 40,000 under the new tax regime.​

Is a Rs. 10 Lakh Salary Tax-Free?

No, a Rs. 10 lakh annual salary is not entirely tax-free under the new tax regime for FY 2025-26. However, by utilizing available exemptions and deductions under the old tax regime, it is possible to significantly reduce or even eliminate the tax liability on a Rs. 10 lakh income. This involves strategic tax planning, including investments in specified instruments and claiming eligible deductions. ​

It's advisable to consult with a tax professional or use official tax calculators to determine the most beneficial tax regime and accurately compute your tax liability.

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