Methodology

1. Splitting your CTC

We split CTC into Basic (default 50%, adjustable), HRA (50% of basic for metros, 40% otherwise), employer PF (12% of basic, capped by default at the ₹15,000/month statutory wage ceiling, which is what most large employers do; toggle it off for PF on full basic), gratuity (4.81% of basic), and a balancing Special Allowance. Employer PF and gratuity are part of CTC but excluded from your monthly cash, since they are not paid out as salary.

2. Taxable income

Taxable salary is your basic + HRA + special allowance + bonus. The new regime subtracts a ₹75,000 standard deduction. The old regime subtracts a ₹50,000 standard deduction plus HRA exemption (least of actual HRA, rent − 10% of basic, or 50%/40% of basic) and deductions under 80C (max ₹1.5L), 80D (max ₹25,000), home-loan interest (max ₹2L), NPS under 80CCD(1B) (max ₹50,000), and professional tax paid (Section 16(iii)). Employer NPS under 80CCD(2) is deductible in both regimes, up to 14% of basic in the new regime (FY 2025-26 onward) and 10% in the old regime.

3. Tax slabs

4. Rebate, surcharge, cess & marginal relief

Section 87A rebate makes income up to ₹12,00,000 (new) or ₹5,00,000 (old) taxable tax-free, with marginal relief just above the new-regime threshold. Surcharge applies above ₹50L (10%), ₹1Cr (15%), ₹2Cr (25%, and 37% over ₹5Cr in the old regime), with marginal relief at each band. A 4% health & education cess applies on tax plus surcharge. Finally we subtract employee PF (12% of basic, capped by default at the ₹15,000/month wage ceiling) and state professional tax to reach monthly in-hand.

Assumptions & limitations

• Figures are estimates; your actual payslip depends on your employer's exact structure.
• Less common deductions (80E education loan, 80G donations, 80TTA) are not modelled.
• Professional tax uses the annual state maximum and is deducted from old-regime taxable income.
• Always confirm with your HR/payroll team or a tax professional.

Sources

Every constant above traces to a statutory source rather than to a third-party calculator. Each is named with its provision so you can check it directly:

• Slab rates, the Section 87A rebate, surcharge bands and the 4% health and education cess come from the Income Tax Act, 1961 as amended by the Finance Act 2025, with rates retained by the Finance Act 2026. See incometaxindia.gov.in and the Income Tax Department portal.
• The standard deduction (₹75,000 in the new regime, ₹50,000 in the old) is Section 16(ia). Professional tax is deductible under Section 16(iii).
• Employer NPS at 14% of basic in the new regime, and 10% in the old, is Section 80CCD(2) as amended by the Finance Act 2024, effective FY 2025-26.
• Provident Fund at 12% of basic, and the ₹15,000 per month wage ceiling, come from the Employees' Provident Funds and Miscellaneous Provisions Act, 1952. See epfindia.gov.in.
• Gratuity provisioning at 4.81% of basic is derived from the Payment of Gratuity Act, 1972 formula: 15 days' wages per completed year, divided by 26 working days.
• Professional tax amounts follow each state's own schedule. The calculator uses the annual statutory maximum for the state you select.

Independently cross-checked against ClearTax and Tax2Win in July 2026 for FY 2026-27; the slabs, standard deduction, 87A rebate, surcharge with marginal relief, and cess all reconciled. Last reviewed July 2026.