At this salary
- No income tax under the new regime: taxable income of ₹3,64,662 (after the ₹75,000 standard deduction) is within the ₹12 lakh rebate limit of section 156.
- Your PF wage of ₹20,000 a month is between ₹15,000 and ₹25,000, the band brought under mandatory EPF coverage when the wage ceiling rose on 17 September 2026.
- The old regime is already no costlier here, even without extra deductions.
How far you are from paying income tax
With this salary structure, a CTC up to about ₹13.91 lakh pays no income tax under the new regime. You have roughly ₹9.11 lakh of raises left before tax starts.
If your employer contributes 14% of basic to NPS (deductible under section 124(1) even in the new regime), the tax-free CTC rises to about ₹15.07 lakh.
PF is your biggest deduction
With no income tax at this salary, your own PF of ₹2,400 a month (6.0% of CTC) is the main thing between gross and in-hand, along with professional tax in some states.
Your PF wage of ₹20,000 is at or below the ₹25,000 ceiling, so capping PF at the ceiling would not lower it.
What the next ₹1 lakh of CTC is worth
Moving from ₹4.8 lakh to ₹5.8 lakh adds ₹85,596 a year to your in-hand (₹7,133 a month). Of the extra ₹1 lakh, ₹0 goes to income tax and the rest to PF, gratuity and employer PF.
Monthly payslip: new vs old regime
Typical month from September 2026, no professional tax, no extra old-regime deductions.
| Item | New regime | Old regime |
|---|---|---|
| Basic | ₹20,000 | ₹20,000 |
| HRA | ₹8,000 | ₹8,000 |
| Special allowance | ₹8,638 | ₹8,638 |
| Gross salary | ₹36,638 | ₹36,638 |
| Your PF | −₹2,400 | −₹2,400 |
| Income tax (TDS) | ₹0 | ₹0 |
| In-hand (before professional tax) | ₹34,238 | ₹34,238 |
Yearly tax on ₹40,000 a month
| Step | New regime | Old regime |
|---|---|---|
| Gross salary | ₹4,39,662 | ₹4,39,662 |
| Deductions | −₹75,000 | −₹78,800 |
| Taxable income | ₹3,64,662 | ₹3,60,862 |
| Tax on slabs | ₹0 | ₹5,543 |
| Rebate (s.156) | −₹0 | −₹5,543 |
| Cess (4%) | ₹0 | ₹0 |
| Total tax | ₹0 | ₹0 |
Old regime deductions counted: Standard deduction ₹50,000; s.123 (old 80C), incl. your PF ₹28,800.
Professional tax on ₹40,000 a month, by state
| State | Per month | Per year | In-hand (new regime) |
|---|---|---|---|
| West Bengal | ₹150 | ₹1,800 | ₹34,088 |
| Telangana | ₹200 | ₹2,400 | ₹34,038 |
| Gujarat | ₹200 | ₹2,400 | ₹34,038 |
| Maharashtra | ₹200 | ₹2,500 | ₹34,038 |
| Karnataka | ₹200 | ₹2,500 | ₹34,038 |
| Madhya Pradesh | ₹208 | ₹2,500 | ₹34,030 |
PF on ₹40,000 a month
| PF calculated on | Your PF a month | In-hand (new regime) |
|---|---|---|
| Full PF wage (₹20,000) | ₹2,400 | ₹34,238 |
| Statutory ceiling (₹25,000) | ₹2,400 | ₹34,238 |
Worked example
Fixed monthly CTC ₹40,000: basic ₹20,000 (50%), HRA ₹8,000, employer PF ₹2,400, gratuity ₹962, leaving a special allowance of ₹8,638. Gross salary ₹36,638 a month, or ₹4,39,662 a year. After the ₹75,000 standard deduction, taxable income is ₹3,64,662 and tax is ₹0. Monthly in-hand: ₹36,638 − ₹2,400 PF − ₹0 TDS = ₹34,238.
Neighbouring salaries
| CTC | In-hand a month (new regime) |
|---|---|
| ₹30,000 a month | ₹25,679 |
| ₹4 LPA | ₹28,532 |
| ₹35,000 a month | ₹29,959 |
| ₹40,000 a month | ₹34,238 |
| ₹5 LPA | ₹35,665 |
| ₹45,000 a month | ₹38,518 |
| ₹6 LPA | ₹42,798 |
Assumptions
- Basic 50% of fixed CTC, HRA 40% of basic, employer PF and gratuity inside CTC, PF on the full basic, no variable pay.
- PF and gratuity wages follow the Labour Code 50% rule (it does not change anything at a 50% basic).
- “₹40,000 a month” is read as monthly CTC (₹4.8 lakh a year). Use the calculator above to match your offer letter.