Income Tax on Rs. 10 Lakh Salary – Calculation, Deductions, and Regime Comparison FY 2025-26

Rs. 10 lakh annual salary places you at an interesting inflection point in India's tax structure — you pay zero tax under the new regime thanks to the Section 87A rebate, but may pay more under the old regime depending on your specific deductions. Understanding exactly where you stand helps you make the right regime choice and maximise take-home pay.

This page covers:

• Exact income tax calculation at Rs. 10 lakh under the new regime
• Why tax is zero at Rs. 10 lakh under the new regime
• Income tax calculation at Rs. 10 lakh under the old regime
• Key deductions that make the old regime beneficial
• Monthly take-home salary after tax at Rs. 10 lakh
• Home loan interest — when it tips the balance toward old regime
• How to compare both regimes for your specific situation

A gross salary of Rs. 10 lakh per year is Rs. 83,333 per month. Before calculating income tax, the standard deduction is applied — the first major step in the calculation.

Income tax on Rs. 10 lakh salary — new tax regime

Step 1: Apply standard deduction

Gross salary: Rs. 10,00,000

Less standard deduction: Rs. 75,000

Net taxable income: Rs. 9,25,000

Step 2: Apply new regime slabs

Step 3: Apply Section 87A rebate

• Rebate applies up to net taxable income of Rs. 12 lakh (new regime)
• Rs. 9.25 lakh is below Rs. 12 lakh → full Rs. 32,500 rebate applies
• Tax after rebate: Rs. 0

Step 4: Add cess

Tax: Rs. 0 + 4% cess: Rs. 0

Total income tax payable: ZERO
 

Income tax on Rs. 10 lakh salary — old tax regime

Step 1: Apply standard deduction (old regime)

• Gross salary: Rs. 10,00,000
• Less standard deduction: Rs. 50,000
• Net taxable income (before other deductions): Rs. 9,50,000
   

Step 2: Apply additional deductions (maximum scenario)

• Section 80C: Rs. 1,50,000 (PPF, ELSS, EPF, insurance)
• Section 80D: Rs. 25,000 (health insurance)
• Section 24(b) home loan interest: Rs. 2,00,000
• Net taxable income after deductions: Rs. 5,75,000
   

Step 3: Apply old regime slabs to Rs. 5,75,000

Step 4: Section 87A rebate (old regime)

Applies up to Rs. 5 lakh net taxable income. At Rs. 5.75 lakh, the rebate does NOT apply. So tax remains Rs. 27,500 before cess.
 

Step 5: Step 5: Health and education cess (4%)

Cess at 4%: Rs. 27,500 × 4% = Rs. 1,100
Total tax old regime (with maximum deductions): Rs. 28,600
 

Without the home loan interest deduction (Section 24b), old regime tax would be approximately Rs. 70,200 — significantly higher than the new regime's zero. Without any deductions beyond the standard deduction, old regime tax rises to approximately Rs. 1,06,600.

Verdict for Rs. 10 lakh salary

The new regime results in zero tax for most earners at this income level, making it the most tax-efficient default choice — unless you have a home loan with significant interest payments and maximised 80C/80D, in which case the old regime may be competitive but still pays more tax than zero.

With Rs. 10 lakh gross and zero income tax:

• Monthly gross: Rs. 83,333
• PF employee contribution (12% of basic): approximately Rs. 7,200 (assuming basic Rs. 60,000)
• Professional tax: approximately Rs. 200
• Approximate monthly take-home: Rs. 75,000 - Rs. 77,000

This does not account for the employer's PF contribution (which increases CTC but does not reach your bank account) or any variable pay.

For a Rs. 10 lakh earner, the new regime already gives zero tax — so home loan interest deduction under the old regime would need to result in lower total tax than zero (impossible) to make the old regime preferable purely on tax grounds. However, at slightly higher income (Rs. 12-15 lakh), where the new regime begins to levy meaningful tax, the combination of home loan interest + HRA + 80C can make the old regime significantly more attractive. This is when having a home loan becomes a powerful tax planning tool.

Bajaj Finance offers home loans from 7.25% p.a.* with amounts up to Rs. 15 Crore* and tenures up to 32 years. Check your eligibility today.