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Case A. A ₹12 lakh package, no deductions claimed
CTC ₹12,00,000 with basic pay at 50%, provident fund on full basic, gratuity included in CTC, professional tax ₹2,500 and no rent or investments claimed. Gross salary works out to ₹10,99,140 after removing the employer's PF of ₹72,000 and a gratuity provision of ₹28,860.
Under the new regime, taxable income is ₹10,24,140 after the ₹75,000 standard deduction, which falls under the ₹12 lakh rebate limit, so tax is nil and monthly take-home is ₹85,387. Under the old regime, taxable income is ₹9,74,640 after the ₹50,000 standard deduction, professional tax and ₹72,000 of PF under 80C, giving tax of ₹1,11,725 and monthly take-home of ₹76,076.
Case B. A ₹30 lakh package in Bengaluru, with rent and deductions
CTC ₹30,00,000 with basic pay at 50%, variable pay of ₹3,00,000, rent of ₹50,000 a month in Bengaluru, the full ₹1,50,000 under 80C and ₹25,000 of health insurance. Gross salary is ₹27,47,850. HRA exemption is ₹4,50,000, being rent for the year less 10% of basic pay, which is lower than both the actual HRA and the 50% limit that Bengaluru now qualifies for.
New regime tax is ₹3,97,129 on taxable income of ₹26,72,850. Old regime tax is ₹4,50,949 on taxable income of ₹20,70,350. Monthly take-home on fixed pay is ₹1,63,367 under the new regime and ₹1,59,000 under the old, so the new regime wins despite the deductions.
Case C. Surcharge and marginal relief just above ₹50 lakh
At taxable income of exactly ₹50,00,000 under the new regime, tax is ₹10,80,000 before cess, with no surcharge, giving ₹11,23,200 including cess. At ₹51,00,000, tax before surcharge is ₹11,10,000. A flat 10% surcharge would add ₹1,11,000, but marginal relief caps the total so that the extra tax cannot exceed the extra income. Surcharge is therefore limited to ₹70,000, and the total including cess is ₹12,27,200.
Case D. An increment effective in April, paid in August
CTC rising from ₹18,00,000 to ₹21,00,000, effective April, first paid in August, with basic at 50% and PF on full basic. Arrears for the four months come to ₹91,595 before deductions, with ₹6,000 of provident fund taken from them. Monthly take-home rises from ₹1,18,126 to ₹1,32,551, and tax for the year is ₹1,76,487 under the new regime.
Case E. Relief on arrears from earlier years
Taxable income of ₹9,00,000 in FY 2025-26 under the old regime, plus ₹3,00,000 of arrears split equally between FY 2021-22 and FY 2022-23, when taxable income was ₹6,00,000 in each year.
Tax on ₹12,00,000 in the year of receipt is ₹1,79,400, against ₹96,200 on ₹9,00,000, so the arrears cost ₹83,200. Had each ₹1,50,000 been paid on time, tax in each of those years would have risen from ₹33,800 to ₹65,000, an increase of ₹31,200 a year. Relief is therefore ₹83,200 less ₹62,400, which is ₹20,800.
What the cases assume
All cases are for a resident individual below 60 with salary as the only income, using rates for the year named in each case. Tax figures include the rebate with marginal relief where it applies, surcharge with marginal relief above ₹50 lakh, and 4% health and education cess. They exclude perquisites, allowances with their own exemptions, and income taxed at special rates.