How it works

Every figure below was checked against a primary source, and where we could not reach one, this page says so. If you find something wrong, tell us.

1. १

   Step 1

   Your CTC, split up

   Basic, HRA, special allowance and variable pay, plus what your employer adds: PF, ESI, gratuity and NPS.

2. २

   Step 2

   Labour Code wages

   If allowances are more than half your pay, the excess is added back. That is the wage PF, ESI and gratuity use.

3. ३

   Step 3

   PF, ESI and professional tax

   Month by month: the PF ceiling that rose on 17 September, the ESI ceiling, and your state’s own calendar.

4. ४

   Step 4

   Income tax, both regimes

   Slabs, the section 156 rebate with marginal relief, surcharge with its own relief, and the 4% cess.

5. ५

   Step 5

   What reaches your bank

   Your monthly in-hand under the cheaper regime, and where every other rupee of the CTC went.

The law this is built on

The Income-tax Act, 2025 replaced the Income-tax Act, 1961 on 1 April 2026, and the Income-tax Rules 2026 replaced the 1962 Rules. So FY 2026-27 is legally Tax Year 2026-27; the term “assessment year” no longer exists. Section numbers changed too, which is why this site cites section 156 rather than 87A, and section 202 rather than 115BAC.

The Finance Act 2026 left the slabs, the standard deduction and the rebate unchanged.

Income tax

• New regime slabs (s.202(1)): nil to ₹4 lakh, then 5%, 10%, 15%, 20%, 25% and 30% in ₹4 lakh steps to ₹24 lakh.
• Old regime slabs: nil to ₹2.5 lakh, 5% to ₹5 lakh, 20% to ₹10 lakh, 30% above. Resident senior citizens start at ₹3 lakh and super seniors at ₹5 lakh.
• Standard deduction (s.19): ₹75,000 new, ₹50,000 old, never more than your salary.
• Rebate (s.156): ₹60,000 up to ₹12 lakh in the new regime, with marginal relief above it; ₹12,500 up to ₹5 lakh in the old regime, with no relief above it. Residents only.
• Surcharge: 10% above ₹50 lakh, 15% above ₹1 crore, 25% above ₹2 crore, and 37% above ₹5 crore in the old regime only. The new regime is capped at 25%.
• Cess: 4% on tax plus surcharge, after both marginal reliefs.

Marginal relief is applied as a real cap, not a flat percentage. At every threshold, tax plus surcharge is limited to the tax at the threshold plus the income above it. The 4% cess is then charged on that capped amount, so inside the relief band each extra rupee costs ₹1.04 and take-home dips very slightly until the band ends. Worked example.

The Labour Code wage rule

Wages under the Code on Wages s.2(y) and the Code on Social Security s.2(88) are basic pay, dearness allowance and retaining allowance. If the excluded payments — HRA, conveyance, travel concessions, employer PF and similar — exceed half of your total remuneration, the excess is added back into wages. That figure is then the base for PF, ESI and gratuity.

Two points in that rule are genuinely ambiguous, so here is exactly what we do:

• What counts as total remuneration. We follow the Ministry of Labour’s Additional FAQs of 16 March 2026: employer PF, pension contributions and statutory bonus are included; gratuity, ESI and other retirement benefits are not. An earlier FAQ of 30 December 2025 put gratuity inside the total in its worked example, and the two conflict. We follow the later and more specific answer.
• Special allowance. It is named in neither the included nor the excluded list. The Ministry treats every payment other than basic, DA and retaining allowance as subject to the 50% test, so that is our default. The statute can also be read as making such allowances wages in full, which raises gratuity and can change ESI; advanced mode has a switch for that reading.

There is no legal floor requiring Basic to be half of CTC, despite how often that is written. The rule changes the calculation, not your payslip. Worked examples.

Provident fund, ESI and gratuity

• PF: 12% employee and 12% employer under the EPF Scheme 2026, on Labour Code wages. The statutory wage ceiling changed mid-year: ₹15,000 a month (re-notified in May 2026) until 16 September 2026, then ₹25,000 under S.O. 5109(E) of 17 September 2026, for EPF, EPS and EDLI alike. We apply it month by month, splitting September by days, so an employer that contributes up to the ceiling deducts ₹1,800 a month until August, ₹2,360 in September and ₹3,000 from October. Some employers contribute on full wages instead; that is a switch, not an assumption. Of the employer’s 12%, 8.33% of wages up to the month’s ceiling goes to the pension scheme. Month-by-month tables.
• ESI: 0.75% employee and 3.25% employer, when wages do not exceed ₹21,000 a month (₹25,000 for a person with a disability). Since 21 November 2025 that ceiling is tested on Labour Code wages rather than gross pay, which can bring in employees whose gross is above the ceiling.
• Gratuity: 15/26 of a month’s wages for each completed year, with a part year above six months counted as a full year. Five years of service are needed, or one year for a fixed-term employee engaged directly, paid pro rata. Capped at ₹20 lakh. Gratuity calculator.

HRA

The exemption is the least of the HRA you receive, rent paid minus 10% of Basic, and 50% or 40% of Basic. From this year, Rule 279 of the Income-tax Rules 2026 puts eight cities at 50%: Mumbai, Kolkata, Delhi, Chennai, Hyderabad, Pune, Ahmedabad and Bengaluru. Sites still using the old four-metro list understate the exemption for Bengaluru, Hyderabad, Pune and Ahmedabad. HRA is not available in the new regime.

Professional tax

This is state law, capped at ₹2,500 a year by Article 276(2), and it is where most calculators are wrong. We compute it month by month:

Professional tax is deductible in the old regime only.

What we assume

• You are a resident individual with salary income only, unless you say otherwise.
• Your salary is the same every month, with no mid-year joining, increment or job change.
• Variable pay is shown as if fully earned, and its tax is spread across the year.
• Where employer contributions to PF and NPS together exceed ₹7.5 lakh a year, we tax the whole excess as a perquisite, and still allow the employer NPS deduction under section 124. The interest later earned on that excess is also taxable, but depends on your fund balance, so it is not included. If employer NPS is also above its own deduction limit, the law as written taxes those rupees twice, once as salary and once as part of the excess. Industry bodies have asked for that to be fixed; until it is, we follow the wording of the Act.
• ESI is shown as a steady state for the year. In reality, someone who crosses the ceiling mid-period stays covered until the contribution period ends in September or March.
• Employer insurance premiums, ESOPs and reimbursements are not modelled.

What we could not verify

These are open, and we would rather say so than paper over them:

• West Bengal’s new slabs are confirmed in the Kolkata Gazette (Notification 1407-F.T., 18 August 2026), but that notification was a draft inviting objections, and we have not yet found the final version.
• Punjab’s income threshold. The state’s clarification is a scanned image we could not read, and its Act still refers to the repealed 1961 Act. We apply the levy above the basic exemption limit.
• Andhra Pradesh. Its slabs match Telangana in every compliance source, but the state portal would not serve its own schedule page.
• Tamil Nadu outside Chennai, where each town sets its own half-yearly rates and the state publishes no single table.
• Odisha's repeal was made by an Ordinance, which lapses unless the legislature replaces it with an Act. We found no replacing Act yet.
• Meghalaya, which since 2022 sets its rates by a notification we could not find on an official site.
• Puducherry's local rates. Its 2017 amendments set minimum half-yearly rates; a municipality may charge more, and we apply the minimum.

When this was checked

Statutory rates were last verified in October 2026 against the Income-tax Act 2025 and Rules 2026, the Finance Act 2026, Ministry of Labour FAQs, EPFO and ESIC notifications, and state professional tax Acts; the professional tax tables for Gujarat, Madhya Pradesh, Assam, Bihar, Jharkhand, Kerala, Chennai, Odisha, Tripura, Sikkim, Manipur, Mizoram, Nagaland and Puducherry were checked in October 2026. They must be checked again after Union Budget 2027 before being used for the next year.