Business Software
How income tax under the new regime is worked out from taxable income, current FY 2026-27 slabs, and how a calculator turns that into a take-home estimate.
Checked against current rules for FY 2026-27 new tax regime slabs on 29 September 2026. Source: Union Budget 2026 (slabs unchanged from FY 2025-26).
Income tax is often the single largest deduction between gross salary and take-home pay for salaried employees at moderate-to-higher income levels — larger than PF, ESI and professional tax combined, once income crosses a certain point. Understanding how it's calculated under the new tax regime makes the rest of your take-home number make sense.
It helps to keep these distinct before going further, since income tax is calculated on none of the first two:
As of financial year 2026-27, the new tax regime's slab rates are as follows (unchanged from FY 2025-26 per Budget 2026, at the time of writing):
| Taxable income slab | Tax rate |
|---|---|
| Up to ₹4,00,000 | Nil |
| ₹4,00,001 – ₹8,00,000 | 5% |
| ₹8,00,001 – ₹12,00,000 | 10% |
| ₹12,00,001 – ₹16,00,000 | 15% |
| ₹16,00,001 – ₹20,00,000 | 20% |
Free Salary & CTC Calculator
Break down a CTC into Basic, HRA, PF, ESI, Professional Tax and Net Take-Home Pay, with an optional New Tax Regime income tax estimate — no signup required.
Is the new tax regime compulsory?
The new tax regime is the default regime, but eligible taxpayers can still choose the old regime instead when filing, if it works out better for them given their specific deductions and exemptions. This article focuses on the new regime specifically.
Is this article tax advice?
No. This is a general explanation of how the new regime's slabs and take-home calculation work, for financial year 2026-27 (assessment year 2027-28) at the time of writing. It is not personalized tax advice — confirm your own tax position with a qualified tax professional or the Income Tax Department's own resources before filing or making financial decisions.
Salary & Payroll
How to Calculate Take-Home Salary in India
Take-home salary is gross salary minus PF, ESI, professional tax and income tax — here's how each deduction is worked out, with an example.
Salary & Payroll
How to Calculate CTC in India
A worked walkthrough of how basic salary, HRA, allowances, employer PF and gratuity provisioning add up to CTC — with a full example.
| ₹20,00,001 – ₹24,00,000 | 25% |
| Above ₹24,00,000 | 30% |
Confirm the current financial year before relying on any slab figures
Tax slabs, the standard deduction and rebate thresholds are set by each year's Union Budget and can change. The figures above are stated for FY 2026-27 (AY 2027-28) specifically — always check which financial year a slab table applies to, and cross-check against the Income Tax Department's own current publications before using these numbers for a filing or salary-negotiation decision.
Once annual tax is worked out from the slabs above (applied to taxable income, not gross salary), employers generally divide the estimated annual tax across the remaining pay cycles in the financial year and deduct it as TDS each month, adjusting as the year progresses and actual income becomes clearer. That monthly TDS deduction, alongside PF, ESI and professional tax, is what turns gross salary into take-home salary.
Because income tax is progressive — different slabs of your income are taxed at different rates — a calculator is far more reliable than a flat-percentage estimate, especially near a slab boundary where a small change in taxable income can shift which rate applies to the marginal amount.
With those limitations in mind, plugging your actual CTC or gross salary into a calculator built around the current slabs is still the fastest way to get a realistic take-home estimate — much faster than working through the slab table by hand.