Navigating your first job offer and the world of taxes can be confusing, especially when deciding between the old and new tax regimes. Let’s break down which option will give you the highest in-hand salary with a ₹10 lakh CTC.
Understanding Your Salary and the Tax Regimes
Your total Cost to Company (CTC) is ₹10 lakh, structured as:
- Gross Salary: ₹9,29,054 (Basic + Flexible Benefits)
- Retirals: ₹70,946 (PF and Gratuity)
You’re also getting a ₹30,000 employer-paid health insurance top-up.
The key difference between the two tax regimes is simple:
- Old Regime: Offers many deductions (like for rent, investments, and insurance) but has higher tax rates.
- New Regime: Has lower tax rates but allows for very few deductions. It’s now the default option for most taxpayers.
Comparing Your Tax Bill: Old vs. New Regime
Let’s calculate your in-hand salary under both scenarios, using the latest tax rules for FY 2025–26.
Old Tax Regime: A Higher Tax Burden
To reduce your tax under this regime, you need to claim deductions. Here’s a breakdown of what that would look like for you:
- Gross Salary: ₹9,29,054
- Less Standard Deduction: ₹50,000
- Less Employee PF: ₹50,676 (This is part of your ₹1.5 lakh limit under Section 80C)
- Taxable Income: ₹8,28,378
Based on this, your total tax would be ₹81,303 after including the 4% education cess.
New Tax Regime: Zero Tax
The new regime is a clear winner for you. Here’s why:
- Gross Salary: ₹9,29,054
- Less Standard Deduction: ₹75,000 (A higher deduction than the old regime)
- Less Employer PF Contribution: ₹50,676 (This is now a permitted deduction in the new regime)
- Taxable Income: ₹8,03,378
Thanks to the enhanced rebate under Section 87A, your entire tax liability of ₹20,338 is canceled out. Your total tax payable is ₹0.
Your In-Hand Salary
The difference in your in-hand salary is significant.
| Calculation | Old Regime | New Regime |
| Annual Tax Payable | ₹81,303 | ₹0 |
| Annual In-Hand Salary | ₹7,97,075 | ₹8,78,378 |
| Monthly In-Hand (Approx.) | ₹66,423 | ₹73,198 |
Final Verdict
For a fresher with a ₹10 lakh CTC, the new tax regime is the best choice. It offers a higher standard deduction, zero tax liability due to the Section 87A rebate, and a significantly higher in-hand salary. You also have the added benefit of not needing to worry about making investments solely for tax purposes, giving you more freedom with your money.