Methodology
This page documents exactly how the calculator works for FY 2025-26 (AY 2026-27), so you can verify every number. Constants come from a single configuration file aligned to the Finance Act 2025.
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, optionally capped at the ₹15,000/month statutory wage ceiling), 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, and home-loan interest (max ₹2L).
3. Tax slabs
- ₹0L – ₹4L: 0%
- ₹4L – ₹8L: 5%
- ₹8L – ₹12L: 10%
- ₹12L – ₹16L: 15%
- ₹16L – ₹20L: 20%
- ₹20L – ₹24L: 25%
- Above ₹24L: 30%
- ₹0L – ₹3L: 0%
- ₹3L – ₹5L: 5%
- ₹5L – ₹10L: 20%
- Above ₹10L: 30%
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) and state professional tax to reach monthly in-hand.
Assumptions & limitations
- Figures are estimates; your actual payslip depends on your employer's exact structure.
- Employer NPS [80CCD(2)] and less common exemptions are not modelled.
- Professional tax uses the annual state maximum.
- Always confirm with your HR/payroll team or a tax professional.
Sources: incometax.gov.in, Finance Act 2025, cleartax.in. Last reviewed for FY 2025-26.