Archive · 31 Jul 2025
New Tax Regime Favored for Entry-Level Salaries
If you're starting your first job and earning Rs 10 lakh, choosing the right tax plan is key.
The Old plan has deductions for things like investments, but the New plan has lower tax rates and a higher standard deduction.
For this salary, the New plan is better; you won't owe any tax, which means more money in your pocket each month to spend or save.
This simplified approach is great for new earners as it reduces complexity.
A recent graduate with a Rs 10 lakh CTC can choose between the Old and New Tax Regimes.
The Old Regime allows deductions like HRA and 80C, while the New Regime offers lower tax rates with fewer deductions.
The New Regime results in a higher in-hand salary due to a higher standard deduction and the Section 87A rebate.
Under the New Regime, the individual has zero tax liability.
For the given salary and situation, the New Tax Regime is the more beneficial option.
- Who
- A new employee starting their career.
- What
- Comparison of Old and New Tax Regimes for a new employee with a Rs 10 lakh CTC.
- When
- For the financial year 2025-26.
- Where
- Not explicitly mentioned.
- Why
- To determine which tax regime provides maximum savings and a higher take-home salary.
Old Tax Regime
New Tax Regime
Deductions and Exemptions
Old Tax Regime
Allows for multiple exemptions and deductions.
New Tax Regime
Offers reduced tax rates with fewer deductions.
- CTC
- Rs 10,00,000
- Basic Salary
- Rs 4,22,297
- Flexible Benefits
- Rs 5,06,757
- Employer PF Contribution
- Rs 50,676
- Gratuity
- Rs 20,270
- Health Insurance Top-up
- Rs 30,000 (employer-paid)
- Old Regime Tax Payable
- Rs 76,103
- New Regime Tax Payable
- Rs 0
- Old Regime In-Hand Salary (Approx.)
- ~Rs 71,080/month
- New Regime In-Hand Salary (Approx.)
- ~Rs 77,420/month