My CTC is Rs 10 lakh in my first job. Which tax regime will gives me maximum in-hand salary?
Choosing between the old vs new tax regime can directly impact your in-hand salary and tax savings. Various deductions and exemptions are allowed in Old tax regime. The new regime offers lower rates of taxes but permits limited deductions and exemptions. Here’s a detailed comparison to help salaried individuals, especially freshers, pick the most tax-efficient option for FY 2025–26.
- Jul 31, 2025,
- Updated Jul 31, 2025 5:30 PM IST
I’m starting my first job and need help understanding which tax regime old or new would give me maximum savings and a higher in-hand salary. My offer includes: Basic Salary Rs 4,22,297, FBP Rs 5,06,757, total Rs 9,29,054. Retirals include PF Rs 50,676 and gratuity Rs 20,270, taking the total CTC to Rs 10 lakh. I’ll also be opting for a Rs 14 lakh health insurance top-up via my employer at Rs 30,000/year. I’m new to taxes and don’t understand deductions, exemptions, or how the top-up affects my tax. Could someone guide me on which regime to choose, what deductions I’m eligible for, and my estimated in-hand salary?
Advice by CA Niyati Shah, Vertical Head – Personal Tax at 1 Finance
The comparison between the Old and New Tax Regimes primarily revolves around tax slabs and available deductions. The Old Regime is ideal for individuals who claim multiple exemptions and deductions such as HRA, standard deduction, and benefits under Sections 80C and 80D. On the other hand, the New Regime features reduced tax rates but does away with most deductions. The right choice depends on your income level, salary components, and how much you invest in eligible tax-saving instruments.
Landing your first job is a significant achievement and so is your first brush with income tax. With Budget 2025 enhancing the new tax regime while still keeping the old one in place, deciding which to choose can be confusing.
For those just stepping into the professional world, it’s important to grasp how your salary is structured, what deductions are available, and how these affect your actual take-home pay.
Let’s decode this with someone starting with a ₹10 lakh Cost to Company (CTC) and evaluate which tax regime provides maximum savings and a higher take-home salary.
Salary Structure Breakdown
| Component | Amount (Rs) |
|---|---|
| Basic Salary | 4,22,297 |
| Flexible Benefits (FBP) | 5,06,757 |
| Gross Salary | 9,29,054 |
| Employer PF Contribution | 50,676 |
| Gratuity | 20,270 |
| Total CTC | 10,00,000 |
| Health Insurance Top-up | 30,000 (employer-paid) |
Taxable Income Calculation
| Particulars | Old Regime (Rs) | New Regime (Rs) |
|---|---|---|
| Gross Salary | 9,29,054 | 9,29,054 |
| Less: Standard Deduction | 50,000 | 75,000 |
| Less: 80C Deduction (PF) | 50,676 | - |
| Less: 80D Deduction (Health Top-up) | 25,000 | - |
| Subtotal | 8,03,378 | 8,54,054 |
| Less: Employer PF (deductible in new regime) | - | 50,676 |
| Taxable Income | 8,03,378 | 8,03,378 |
Tax Computation for FY 2025–26
Old Regime
| Slab | Rate | Tax (₹) |
|---|---|---|
| Up to ₹2.5L | Nil | - |
| ₹2.5L – ₹5L | 5% | 12,500 |
| ₹5L – ₹8.03L | 20% | 60,676 |
| Total Tax | 73,176 | |
| Health & Education Cess (4%) | 2,927 | |
| Total Tax Payable | 76,103 |
New Regime
| Slab | Rate | Tax (₹) |
|---|---|---|
| Up to ₹4L | Nil | - |
| ₹4L – ₹8L | 5% | 20,000 |
| ₹8L – ₹8.03L | 10% | 338 |
| Total Before Rebate | 20,338 | |
| Less: Section 87A Rebate | 20,338 | |
| Total Tax Payable | ₹0 |
In-Hand Salary Comparison
| Computation | Old Regime (Rs) | New Regime (Rs) |
|---|---|---|
| CTC | 10,00,000 | 10,00,000 |
| Less: Employer PF + Gratuity | 70,946 | 70,946 |
| Less: Income Tax | 76,103 | 0 |
| Annual In-Hand Salary | 8,52,951 | 9,29,054 |
| Monthly In-Hand (Approx.) | ~71,080 | ~77,420 |
Conclusion:
For salaried individuals starting their careers, especially those without major investments, housing rent, or deductions, the new tax regime is a clear winner. Here's why:
1. Higher Standard Deduction of ₹75,000 increases take-home pay.
2. Zero Tax Liability due to the raised Section 87A rebate limit (₹12L).
3. Simplified Compliance with no investment proofs or declaration hassle.
4. Better Liquidity to meet early-career goals like EMIs, savings, or travel.
For a fresher earning Rs 10 Lakh CTC, the new tax regime, especially after Budget 2025, offers unmatched ease, higher in-hand salary, and zero tax burden. It aligns well with early financial priorities, allowing more room for life-style, liquidity and savings; without the pressure to invest just for tax benefits.
Assumptions taken:
1. Flexible benefits are considered fully taxable as no break-up available like HRA, LTA, etc. under the old regime.
2. The Mediclaim paid u/s 80D is considered for self only. Under old regime.
3. Employer-paid health top-up is treated as non-taxable and excluded from Gross Salary under both regimes.
I’m starting my first job and need help understanding which tax regime old or new would give me maximum savings and a higher in-hand salary. My offer includes: Basic Salary Rs 4,22,297, FBP Rs 5,06,757, total Rs 9,29,054. Retirals include PF Rs 50,676 and gratuity Rs 20,270, taking the total CTC to Rs 10 lakh. I’ll also be opting for a Rs 14 lakh health insurance top-up via my employer at Rs 30,000/year. I’m new to taxes and don’t understand deductions, exemptions, or how the top-up affects my tax. Could someone guide me on which regime to choose, what deductions I’m eligible for, and my estimated in-hand salary?
Advice by CA Niyati Shah, Vertical Head – Personal Tax at 1 Finance
The comparison between the Old and New Tax Regimes primarily revolves around tax slabs and available deductions. The Old Regime is ideal for individuals who claim multiple exemptions and deductions such as HRA, standard deduction, and benefits under Sections 80C and 80D. On the other hand, the New Regime features reduced tax rates but does away with most deductions. The right choice depends on your income level, salary components, and how much you invest in eligible tax-saving instruments.
Landing your first job is a significant achievement and so is your first brush with income tax. With Budget 2025 enhancing the new tax regime while still keeping the old one in place, deciding which to choose can be confusing.
For those just stepping into the professional world, it’s important to grasp how your salary is structured, what deductions are available, and how these affect your actual take-home pay.
Let’s decode this with someone starting with a ₹10 lakh Cost to Company (CTC) and evaluate which tax regime provides maximum savings and a higher take-home salary.
Salary Structure Breakdown
| Component | Amount (Rs) |
|---|---|
| Basic Salary | 4,22,297 |
| Flexible Benefits (FBP) | 5,06,757 |
| Gross Salary | 9,29,054 |
| Employer PF Contribution | 50,676 |
| Gratuity | 20,270 |
| Total CTC | 10,00,000 |
| Health Insurance Top-up | 30,000 (employer-paid) |
Taxable Income Calculation
| Particulars | Old Regime (Rs) | New Regime (Rs) |
|---|---|---|
| Gross Salary | 9,29,054 | 9,29,054 |
| Less: Standard Deduction | 50,000 | 75,000 |
| Less: 80C Deduction (PF) | 50,676 | - |
| Less: 80D Deduction (Health Top-up) | 25,000 | - |
| Subtotal | 8,03,378 | 8,54,054 |
| Less: Employer PF (deductible in new regime) | - | 50,676 |
| Taxable Income | 8,03,378 | 8,03,378 |
Tax Computation for FY 2025–26
Old Regime
| Slab | Rate | Tax (₹) |
|---|---|---|
| Up to ₹2.5L | Nil | - |
| ₹2.5L – ₹5L | 5% | 12,500 |
| ₹5L – ₹8.03L | 20% | 60,676 |
| Total Tax | 73,176 | |
| Health & Education Cess (4%) | 2,927 | |
| Total Tax Payable | 76,103 |
New Regime
| Slab | Rate | Tax (₹) |
|---|---|---|
| Up to ₹4L | Nil | - |
| ₹4L – ₹8L | 5% | 20,000 |
| ₹8L – ₹8.03L | 10% | 338 |
| Total Before Rebate | 20,338 | |
| Less: Section 87A Rebate | 20,338 | |
| Total Tax Payable | ₹0 |
In-Hand Salary Comparison
| Computation | Old Regime (Rs) | New Regime (Rs) |
|---|---|---|
| CTC | 10,00,000 | 10,00,000 |
| Less: Employer PF + Gratuity | 70,946 | 70,946 |
| Less: Income Tax | 76,103 | 0 |
| Annual In-Hand Salary | 8,52,951 | 9,29,054 |
| Monthly In-Hand (Approx.) | ~71,080 | ~77,420 |
Conclusion:
For salaried individuals starting their careers, especially those without major investments, housing rent, or deductions, the new tax regime is a clear winner. Here's why:
1. Higher Standard Deduction of ₹75,000 increases take-home pay.
2. Zero Tax Liability due to the raised Section 87A rebate limit (₹12L).
3. Simplified Compliance with no investment proofs or declaration hassle.
4. Better Liquidity to meet early-career goals like EMIs, savings, or travel.
For a fresher earning Rs 10 Lakh CTC, the new tax regime, especially after Budget 2025, offers unmatched ease, higher in-hand salary, and zero tax burden. It aligns well with early financial priorities, allowing more room for life-style, liquidity and savings; without the pressure to invest just for tax benefits.
Assumptions taken:
1. Flexible benefits are considered fully taxable as no break-up available like HRA, LTA, etc. under the old regime.
2. The Mediclaim paid u/s 80D is considered for self only. Under old regime.
3. Employer-paid health top-up is treated as non-taxable and excluded from Gross Salary under both regimes.