Income Tax on Salary in India — How Much & How to Calculate

In the default new regime a salaried employee pays zero income tax up to about Rs12.75 lakh of salary. This is the Rs75,000 standard deduction plus the Section 87A rebate, which zeroes out tax up to Rs12,00,000 of taxable income. In the old regime the 87A rebate applies only up to Rs5,00,000 of income.

The standard deduction is a flat amount subtracted from salary income with no proof required. For FY 2025-26 it is Rs75,000 in the new regime and Rs50,000 in the old regime. It is available to every salaried employee and pensioner and is the main reason the salaried nil-tax point is Rs12.75L rather than Rs12L.

On a Rs14 lakh salary in the new regime, subtract the Rs75,000 standard deduction to get Rs13,25,000 taxable. Tax works out to roughly Rs93,750 before cess (5% of Rs4L + 10% of Rs4L + 15% of Rs1.25L), and about Rs97,500 after 4% cess. The 87A rebate does not apply because taxable income exceeds Rs12L. The exact figure depends on any other income and eligible deductions.

The new regime (default) has lower slab rates, a Rs75,000 standard deduction and an 87A rebate up to Rs12L income, but disallows HRA, LTA and most 80-series deductions. The old regime has higher rates and a Rs50,000 standard deduction but lets you claim 80C (Rs1.5L), 80D, HRA and home-loan interest (Rs2L). Broadly, the old regime wins only when total deductions exceed roughly Rs3.75-4 lakh.

No, but it is the default. If you do nothing, the new regime applies. Salaried taxpayers can opt for the old regime each year by filing Form 10-IEA before the ITR due date. Salaried individuals without business income can switch between regimes freely from year to year.

File Form 10-IEA on the income tax portal before the due date for filing your return, and inform your employer at the start of the year so TDS is deducted under the old regime. Without Form 10-IEA, your return defaults to the new regime regardless of your investments.

Yes. A salaried employee with no business or professional income can choose the old or new regime afresh each financial year based on which is cheaper. Taxpayers with business income face restrictions on switching back once they leave the new regime.

In the old regime: HRA (Section 10(13A)), LTA (Section 10(5)), gratuity up to Rs20 lakh (Section 10(10)), leave encashment, and allowances like children education and uniform. In the new regime, most of these are not available — you effectively get the standard deduction and the employer NPS contribution (Section 80CCD(2)). Employer EPF and NPS contributions within limits remain outside taxable salary in both regimes.

No. House Rent Allowance exemption under Section 10(13A) is available only in the old regime. If you pay significant rent and receive HRA, that is a strong reason to compare the old regime. In the new regime HRA is fully taxable, though the Rs75,000 standard deduction and lower rates often still leave you better off.

Only in the old regime. Section 80C (up to Rs1.5 lakh for PPF, ELSS, LIC, EPF, principal repayment) and Section 80D (health insurance, Rs25,000 or Rs50,000 for seniors) are not allowed in the new regime. The employer NPS contribution under Section 80CCD(2) is the notable deduction that survives in the new regime.

Form 16 is the TDS certificate your employer gives you. Part A shows TDS deducted and deposited quarter-wise with the employer TAN and your PAN; Part B shows the salary break-up, exemptions, deductions and tax computed. It must be issued by 15 June after the financial year ends — so for FY 2025-26, by 15 June 2026 — and is used to file your ITR.

Under Section 192 the employer estimates your annual salary, subtracts declared exemptions and deductions, computes the tax and deducts it in roughly equal monthly instalments. You declare investments and HRA via Form 12BB so the deduction is accurate. TDS deducted appears in Form 26AS and the AIS on the income tax portal.

If TDS falls short — commonly after a job change where the new employer did not account for previous salary — you must pay the balance as advance tax or self-assessment tax. Interest under Section 234B and 234C (1% per month) can apply on the shortfall. If excess TDS was deducted, you claim a refund when you file your ITR.

Most salaried individuals with income up to Rs50 lakh from salary, one house property and other sources file ITR-1 (Sahaj). If you have capital gains, more than one house property, foreign income or income above Rs50 lakh, you file ITR-2. Salary data is pre-filled from Form 16 and the AIS on the income tax portal.

If your total income after deductions is within the basic exemption and no tax is due, filing may not be strictly mandatory, but it is advisable — to claim a TDS refund, keep an income record for loans or visas, and stay compliant. If TDS was deducted on your salary, you must file to get it refunded.