Earning ₹10 lakhs per annum is a major financial milestone - but it also brings one big question: how much income tax do I actually have to pay? Many salaried employees assume a fixed tax amount, but in reality, the tax on a ₹10 lakh salary can vary widely based on tax regime selection, deductions, exemptions, and salary structure.
Under the old tax regime, your tax liability depends on how effectively you use benefits like standard deduction, Section 80C investments, health insurance (80D), and NPS. On the other hand, the new tax regime offers lower slab rates with fewer deductions, making it simpler but not always cheaper. This is why two individuals earning the same ₹10 lakh income can end up paying completely different tax amounts.
In this guide, we break down the exact income tax calculation on ₹10 lakh salary under both old and new tax regimes, with clear tables, real examples, and easy explanations. You’ll also learn how to legally reduce your tax, which regime suits you best, and what your monthly TDS could look like - so there are no surprises at year-end.
What Does ₹10 Lakhs Per Annum Mean for Income Tax?
When someone says they earn ₹10 lakhs per annum, it simply means their total yearly income before tax is ₹10,00,000. However, for income tax purposes, this amount is not always the final figure on which tax is calculated. The Income Tax Department looks at how much of this income is actually taxable after applying rules, exemptions, and deductions.
In most cases, ₹10 lakhs per annum refers to gross salary, which may include basic pay, HRA, allowances, bonuses, and other benefits. From this gross income, certain amounts are reduced - such as the standard deduction and eligible tax-saving investments - before arriving at the taxable income.
It’s also important to understand that income tax is calculated annually, not monthly. Even if your salary is credited every month, the tax liability is assessed on your total income earned during the financial year.
Another key point is that earning ₹10 lakhs does not automatically mean you will pay high tax. Your final tax amount depends on:
- Whether you choose the old tax regime or the new tax regime
- The deductions and exemptions you are eligible to claim
- Your investment and tax-planning decisions
Income Tax Calculation on ₹10 Lakhs (New Tax Regime)
If your annual income is ₹10 lakhs and you choose the new tax regime, your income tax is calculated using lower slab rates but without most deductions and exemptions. This regime is ideal for individuals who do not claim tax-saving investments like 80C, HRA, or 80D.
Under the new tax regime, the entire ₹10 lakh income is considered for taxation, except for the standard reliefs available under the regime. The tax is applied slab by slab, meaning different portions of your income are taxed at different rates - not the entire amount at one rate.
Step-by-Step Tax Calculation
Here’s how income tax on ₹10 lakhs is calculated under the new tax regime:
| Annual Income (₹) | Applicable Tax Rate |
|---|---|
| Up to ₹4,00,000 | No tax |
| ₹4,00,001 to ₹8,00,000 | 5% |
| ₹8,00,001 to ₹12,00,000 | 10% |
| ₹12,00,001 to ₹16,00,000 | 15% |
| ₹16,00,001 to ₹20,00,000 | 20% |
| ₹20,00,001 to ₹24,00,000 | 25% |
| Above ₹24,00,000 | 30% |
Income Tax Slabs Under the Old Tax Regime
The old tax regime is suitable for taxpayers who want to reduce their taxable income using deductions and exemptions. It works best for salaried individuals and investors who actively plan their taxes.
This regime allows benefits such as standard deduction, Section 80C investments, health insurance under 80D, and home loan interest deductions. If you claim multiple deductions, the old regime can result in lower tax liability despite higher slab rates.
| Annual Income Range (₹) | Income Tax Rate |
|---|---|
| Up to ₹2,50,000 | No tax |
| ₹2,50,001 to ₹5,00,000 | 5% |
| ₹5,00,001 to ₹10,00,000 | 20% |
| Above ₹10,00,000 | 30% |
At first glance, it appears that opting for the new tax regime will result in tax savings of Rs. 37,500 (Rs. 1,12,500 – Rs. 75,000). However, the standard deductions and the various exemptions that were calculated under the old tax regime will not be included here.
Let’s see how the tax pans out when you claim deductions and the exemptions available under the old tax regime.
| Particulars | Old Regime (Rs.) | New Regime (Rs.) |
|---|---|---|
| Basic salary + daily allowance | 3,88,600 | 3,88,600 |
| Other taxable allowances | 6,11,400 | 6,11,400 |
| Gross salary | 10,00,000 | 10,00,000 |
| Standard deduction | 50,000 | 75,000 |
| Deductions under Section 80C | 1,50,000 | NIL |
| Taxable income | 8,00,000 | 9,25,000 |
| Income tax payable | 72,500 | ~37,500 |
This table updates your original data with current standard deduction of Rs. 75,000 in new regime and revised tax slabs, making new regime more beneficial here.
Also Read: How to Calculate Your Income Tax?
FAQs
1. Is ₹10 lakh salary tax-free?
A ₹10 lakh salary is not automatically tax-free in India. Under the new tax regime, after the ₹75,000 standard deduction, the taxable income comes to ₹9.25 lakh, which does not qualify for the Section 87A rebate (available only up to ₹7 lakh). As a result, tax is payable. Under the old tax regime, the tax liability generally ranges from around ₹57,000 to over ₹1 lakh, depending on deductions claimed such as 80C, HRA, or home loan benefits.
2. Which tax regime is better for ₹10 lakh income?
For a ₹10 lakh salary in FY 2025–26, the new tax regime is usually better if you don’t claim major deductions, as it results in a lower tax outgo after the ₹75,000 standard deduction. Under the old tax regime, you need ₹2–2.5 lakh or more in deductions (like 80C, HRA, or home loan benefits) to get a similar tax benefit. For most salaried individuals with limited exemptions, the new regime is the more practical choice.
3. Can I save tax completely on ₹10 lakh income?
No, a ₹10 lakh salary cannot be made completely tax-free in India.
Even after deductions under the old regime or the ₹75,000 standard deduction under the new regime, taxable income exceeds the Section 87A rebate limit. As a result, some income tax is still payable in both regimes.