Sandeep moved to a ₹9.8 lakh role as a QA engineer in Mysuru and had to pick a tax regime on the joining form. New regime: ₹69,703 a month, zero income tax. Old regime with no real deductions: ₹62,594 a month, because ₹9.8 lakh gets taxed ₹85,307 there. Same CTC, ₹7,109 a month difference, decided by one checkbox. At ₹9.8 lakh the new regime wins by a distance.
What ₹9.8 lakh CTC actually contains
Standard 50% basic structure at ₹9.8L:
| Component | Annual | Monthly |
|---|---|---|
| Basic salary | ₹4,90,000 | ₹40,833 |
| HRA (50% of basic) | ₹2,45,000 | ₹20,417 |
| Special allowance | ₹1,62,631 | ₹13,553 |
| Employer PF (12% of basic) | ₹58,800 | ₹4,900 |
| Gratuity provision (4.81%) | ₹23,569 | ₹1,964 |
| Total CTC | ₹9,80,000 | ₹81,667 |
Employer PF plus gratuity comes to ₹82,369. That money sits inside the ₹9.8 lakh CTC and never lands in your salary account. Your gross salary, the part payroll actually pays, is ₹8,97,631 a year.
Take-home calculation (new regime)
| Item | Annual | Monthly |
|---|---|---|
| Gross salary (excl. employer PF + gratuity) | ₹8,97,631 | ₹74,803 |
| Less: Employee PF | ₹58,800 | ₹4,900 |
| Less: Professional tax (Karnataka) | ₹2,400 | ₹200 |
| Less: Income tax | ₹0 | ₹0 |
| In-hand | ₹8,36,431 | ₹69,703 |
Tax working: gross ₹8,97,631 minus the ₹75,000 standard deduction leaves taxable income of ₹8,22,631. The slab tax adds up to ₹22,263 (₹20,000 in the 5% slab, ₹2,263 in the 10% slab), but taxable income stays under the ₹12 lakh line, so the section 87A rebate of up to ₹60,000 wipes the whole amount. Tax payable: zero.
New regime vs old regime at this salary
This is the band where the regime choice is the whole game. Under the new regime, taxable income of ₹8,22,631 sits under the ₹12 lakh line, so the section 87A rebate still reaches it and income tax is zero. Switch to the old regime with no major deductions and the same ₹9.8 lakh is taxed ₹85,307 a year, pulling monthly in-hand down to ₹62,594. That is ₹85,307 a year, gone for ticking the wrong box.
The old regime only catches up if you genuinely stack deductions: the full ₹1.5 lakh under 80C, ₹25,000 of 80D health cover, ₹50,000 of NPS under 80CCD(1B), and real HRA exemption from rent paid. Without most of that, stay on the new regime. Run your actual numbers both ways in the take-home calculator before you commit on the joining form.
How take-home moves across the salary ladder
| CTC | Monthly take-home | Income tax / year |
|---|---|---|
| ₹9L | ₹63,996 | Zero |
| ₹9.2L | ₹65,423 | Zero |
| ₹9.5L | ₹67,563 | Zero |
| ₹9.6L | ₹68,276 | Zero |
| ₹9.8L | ₹69,703 | Zero |
| ₹10L | ₹71,129 | Zero |
| ₹11L | ₹78,262 | Zero |
| ₹11.5L | ₹81,829 | Zero |
| ₹12L | ₹85,395 | Zero |
All figures: new regime, Karnataka professional tax, 50% basic structure, FY 2025-26. Plug your own CTC and city into the take-home salary calculator for an exact number.
Sources
- Income Tax Act 1961: Section 115BAC new regime slabs, ₹75,000 standard deduction, Section 87A rebate (FY 2025-26)
- EPFO: 12% employee plus 12% employer PF contribution on basic salary
- Payment of Gratuity Act 1972: 4.81% gratuity provision formula
- State Professional Tax Acts (Karnataka rate used as the representative figure)