Tax on Salary 2026: New vs Old Regime Calculator for a Rs 10 Lakh Income (FY 2026-27)

Two colleagues earn exactly Rs 10 lakh. One pays nothing to the tax department. The other pays over Rs 1 lakh. Same salary, same city, same job. The only difference is a single choice on a form: which tax regime to use.

Since the Union Budget 2025 widened the zero-tax limit, the answer for Rs 10 lakh earners has become surprisingly simple, yet millions still pick the wrong regime out of habit or because an HR portal pre-selected it. This guide shows the exact math, the numbers for FY 2026-27, when the old regime still makes sense, and a free calculator so you can test your own salary in seconds.

Tax on a Rs 10 Lakh Salary: The Exact Numbers

Here is the headline comparison for a salaried individual below 60 with Rs 10 lakh of gross salary and no other income, for FY 2026-27 (assessment year 2027-28). Budget 2026 left the slabs, standard deduction and rebate unchanged, so the numbers below match what applied in the previous year.

That is a gap of Rs 1,06,600 a year, or about Rs 8,900 a month, for the same salary. The old regime only closes the gap if you claim large deductions, which we cover below.

Income Tax Slabs for FY 2026-27 (Both Regimes)

New regime slabs (the default)

The new regime is the default for everyone unless you choose otherwise. It has wide slabs and a higher rebate but allows very few deductions.

Old regime slabs

The two rebates that change everything

• New regime: a Section 87A rebate of up to Rs 60,000 makes tax zero when taxable income is up to Rs 12 lakh. Add the Rs 75,000 standard deduction and a salaried person is tax-free up to about Rs 12.75 lakh of salary.
• Old regime: the rebate is only Rs 12,500, which makes taxable income up to Rs 5 lakh tax-free.

Step-by-Step Calculation for Rs 10 Lakh

New regime, step by step

1. Start with gross salary: Rs 10,00,000.
2. Subtract the standard deduction: Rs 10,00,000 minus Rs 75,000 = Rs 9,25,000 taxable income.
3. Apply the slabs: first Rs 4 lakh is nil. The next Rs 4 lakh at 5% = Rs 20,000. The remaining Rs 1,25,000 at 10% = Rs 12,500. Total = Rs 32,500.
4. Apply the Section 87A rebate: taxable income is below Rs 12 lakh, so the rebate (up to Rs 60,000) cancels the full Rs 32,500.
5. Add 4% cess: on Rs 0, that is Rs 0. Final tax: Rs 0.

Old regime, step by step (no deductions)

1. Start with gross salary: Rs 10,00,000.
2. Subtract the standard deduction: Rs 10,00,000 minus Rs 50,000 = Rs 9,50,000.
3. Apply the slabs: first Rs 2.5 lakh is nil. The next Rs 2.5 lakh at 5% = Rs 12,500. The remaining Rs 4,50,000 at 20% = Rs 90,000. Total = Rs 1,02,500.
4. Rebate: not available because taxable income is above Rs 5 lakh.
5. Add 4% cess: Rs 4,100. Final tax: Rs 1,06,600.

Old regime with common deductions

Here is how the old regime looks when you claim deductions. All figures include the Rs 50,000 standard deduction and 4% cess.

Even a very well-planned old-regime return at Rs 10 lakh, with 80C, health insurance, NPS and Rs 2 lakh of home loan interest, still pays Rs 18,200, while the new regime pays nothing.

Which Deductions Work in Which Regime

The old regime rewards you for spending and investing in specific ways. The new regime gives you lower rates and a simpler return, but removes most of those deductions.

HRA: the deduction that quietly decides many cases

If you pay rent, the HRA exemption can be large. For example, someone with a Rs 1.2 lakh HRA exemption who also maxes out 80C (Rs 1.5 lakh) and health insurance (Rs 25,000) has total deductions of Rs 2.95 lakh. At Rs 10 lakh gross that leaves taxable income of Rs 6.55 lakh under the old regime and tax of about Rs 45,240, still more than the new regime’s Rs 0. HRA is powerful, but at this salary it usually still falls short.

Home loan interest

Interest on a self-occupied home is deductible up to Rs 2 lakh a year under the old regime. This is often the single biggest deduction for people with an active loan, and it is the main reason some borrowers beat the new regime at higher salaries.

How common salary components are taxed

Your pay slip has more parts than just “salary,” and each part is treated a little differently. Knowing this helps you see where deductions really come from.

• Basic pay and special allowance: fully taxable in both regimes. These usually make up the largest share of your pay.
• House rent allowance (HRA): exempt only in the old regime, and only up to the least of the HRA you receive, rent paid minus 10% of basic, or a set percentage of basic (higher in metro cities). You need rent receipts, and landlord PAN details for larger rent.
• Leave travel allowance (LTA): exempt for actual domestic travel in the old regime only.
• Employer PF contribution: generally not taxed up to the legal limit, but total employer contributions to PF, NPS and superannuation above Rs 7.5 lakh in a year become taxable. Interest on your own PF contributions above Rs 2.5 lakh a year can also be taxable.
• Employer NPS contribution: deductible under both regimes within limits, which makes it a rare tax lever for new-regime taxpayers.
• Bonuses and variable pay: taxable in the year you receive them, so a bonus can push you towards a higher slab.

If a large part of your tax saving depends on HRA or LTA, the old regime can look better on paper, but remember that you must have real documents to back every claim.

Break-Even: When the Old Regime Wins

The old regime only wins when your total deductions are large enough. The break-even point (the amount of deductions, beyond the Rs 50,000 standard deduction, needed to match the new regime) depends on your salary:

Four real-life examples

Numbers make this concrete. The table below shows four people, each with real-sounding deductions, and compares their tax in both regimes for FY 2026-27 (including 4% cess).

Notice the pattern. Even people who plan carefully and claim most of the common deductions come out ahead in the new regime. The old regime tends to win only for people with unusually high deductions, such as a large home loan combined with big HRA, NPS and insurance claims, or at very high salaries with several substantial deductions stacked together.

Just above the limit: marginal relief

If your taxable income is slightly above Rs 12 lakh under the new regime, you do not suddenly lose the whole rebate. Marginal relief caps the tax at the amount by which your income exceeds Rs 12 lakh. For example, with a Rs 13 lakh salary, taxable income is Rs 12.25 lakh. Slab tax would be Rs 63,750, but the relief limits it to Rs 25,000, plus Rs 1,000 cess = Rs 26,000.

Try it: regime calculator for your own salary

How to Choose and Switch Regimes

The rules for salaried people

• The new regime is the default. If you do nothing, your employer will assume it.
• You can switch every year if you have only salary, interest and similar non-business income. You choose when you file your return, and you can pick a different regime next year.
• Tell your employer early. Your payroll team uses your declaration to calculate monthly TDS. If you declare the wrong regime, too much or too little tax is withheld, though you can correct it when you file your return.
• Business or professional income follows stricter rules. Once you opt out of the new regime, switching back is limited, so get advice before choosing.

A simple decision checklist

1. Work out your gross salary and use the standard deduction for each regime.
2. Add up the deductions you would really claim in the old regime: HRA exemption, 80C, 80D, NPS, home loan interest, LTA.
3. Compare the total with your break-even number from the table above.
4. If your deductions are below the break-even figure, choose the new regime.
5. If you are close, consider non-tax factors: do you want to keep investing in tax-saving products, or would you rather have the money in hand?
6. Submit your declaration to your employer, and recheck it at filing time.

What happens when you file your return

When you file your income tax return for FY 2026-27, you confirm the regime you want to use. If your employer deducted TDS under a different regime than the one that suits you best, the return settles the difference. You will get a refund if too much tax was withheld, or you will pay the balance if too little was. Check your Annual Information Statement and Form 26AS before filing so that every income and TDS entry matches your records. Keep proofs for any old-regime deductions in case of a query from the department.

Your yearly tax calendar

• April: submit your regime declaration to your employer and review your salary structure for the new year.
• June to September: if you chose the old regime, spread your 80C and NPS investments through the year instead of rushing in March.
• December to January: your employer will ask for investment and rent proofs. Collect receipts, loan certificates and premium statements ahead of time.
• March: review your numbers one last time, including any bonuses received during the year.
• May to July: collect Form 16 and your tax statements, then file your return before the usual July 31 deadline for salaried individuals.

Smart tax moves at Rs 10 lakh

• Do not buy products only for tax. A tax-saver with a poor return or a long lock-in can cost more than the tax it saves.
• Use the new regime and invest anyway. Putting money in an SIP, PPF or emergency fund still builds wealth even without a deduction.
• Ask about employer NPS. Employer contributions to NPS are one of the few deductions that work in the new regime.
• Keep health insurance. Even if the premium is not deductible in the new regime, adequate cover protects your savings.
• Stay under Rs 12.75 lakh if you can. Salary components that are structured legitimately, such as employer NPS, can help you stay below the zero-tax line, but check with your HR and a Chartered Accountant.

Risks and Common Mistakes

• Choosing by habit. Many people stay in the old regime because they always did, and lose over Rs 1 lakh at Rs 10 lakh salary. Recalculate every year.
• Overestimating deductions. People often assume they will claim 80C, 80D and HRA in full, then fall short. Use real documents, not hopes.
• Ignoring other income. Interest from fixed deposits, rent, freelance income and capital gains are added to your total or taxed separately. The rebate may not apply in full against certain special-rate income such as some capital gains, so check with a Chartered Accountant.
• Wrong declaration to the employer. This causes excess TDS or a surprise tax bill at filing. You can usually recover excess TDS as a refund, but it takes time.
• Missing documents. Rent receipts, landlord PAN (for high rent), loan certificates and investment proofs are needed for old-regime claims.
• Advance tax and interest. If you have large non-salary income, you may owe advance tax. Missing it can bring interest charges.
• Rule changes. Slabs, rebates and deduction limits can change in any Budget. The figures here are for FY 2026-27 and may differ later.
• Filing late. Missing the usual July 31 deadline for salaried individuals can mean a late fee and fewer options to carry forward losses.

Frequently Asked Questions

Is income up to Rs 10 lakh tax-free in 2026?

For a salaried person under the new regime, yes. After the Rs 75,000 standard deduction, taxable income is Rs 9.25 lakh, and the Section 87A rebate removes the tax. In the old regime, tax is payable unless you claim around Rs 4.5 lakh of deductions.

What is the tax on Rs 10 lakh salary in the old regime?

About Rs 1,06,600 including cess, if you claim only the Rs 50,000 standard deduction. With Rs 1.5 lakh under 80C it falls to about Rs 75,400.

Which regime is better for a Rs 10 lakh salary?

For most people the new regime, because it gives zero tax without any paperwork. The old regime only wins if your deductions total more than about Rs 4.5 lakh.

Up to what salary is tax zero in the new regime?

Up to about Rs 12.75 lakh for a salaried individual, because the standard deduction (Rs 75,000) plus the rebate on taxable income up to Rs 12 lakh covers it.

Can I switch between old and new regimes every year?

Salaried taxpayers without business income can usually choose a regime each year when filing. Those with business or professional income have limited ability to switch back, so check the rules first.

Does the new regime allow 80C and HRA?

No. 80C, HRA, LTA, home loan interest on a self-occupied house and most other deductions are not available in the new regime. The standard deduction and employer NPS contributions are still allowed.

Should I stop investing in tax-saving funds if I choose the new regime?

Not necessarily. Tax saving should not be the only reason to invest. You can still use PPF, ELSS, NPS and insurance for their own goals, without the deduction.

How do I tell my employer which regime I chose?

Most companies ask you to submit a regime declaration through the payroll or HR portal at the start of the financial year. If you do nothing, the new regime applies by default. You can finalise the choice when you file your income tax return.

The Bottom Line

On a Rs 10 lakh salary, the new tax regime for FY 2026-27 gives you Rs 0 tax and almost no paperwork, while the old regime costs between Rs 1,06,600 and a smaller amount if you work hard on deductions. Unless you can legitimately claim Rs 4.5 lakh or more of deductions, the new regime is the better choice.

Run your numbers with the calculator above, check your break-even figure, tell your employer, and revisit the decision every April. A few minutes of planning can save you more than a month’s salary component over a year.

Disclaimer: This article is for educational purposes only and is not tax, legal or investment advice. Figures reflect the slabs, rebates and deductions understood to apply for FY 2026-27 (AY 2027-28) as of October 2026 and are approximate, since rules can change and individual cases differ. Examples assume salary income only, age below 60, resident status and no surcharge. Consult a Chartered Accountant before choosing your tax regime or filing your return.