At ₹20 lakh the old regime is effectively out of reach, and the useful levers move from deductions to salary structure.
Corrected 29 August 2026. An earlier version of this page excluded target variable pay from both received cash and taxable salary, which understated income tax. Figures are recalculated under model PS-A3. What changed →
Short answer: on a ₹20 Lakh gross salary you pay ₹1.92 L in income tax under the new regime for Tax Year 2026-27 and FY 2026-27 — an effective 9.6% of gross, or about ₹16,033 deducted as TDS each month.
New tax regime, Tax Year 2026-27 and FY 2026-27 · Rates and slabs are indicative, as of August 2026
New regime tax is ₹1.92 L, an effective 9.6% of gross. To beat it under the old regime you would need roughly ₹7.08 L of deductions.
Add up the ceilings: 80C caps at ₹1.5 lakh, 80CCD(1B) at ₹50,000, 80D at ₹25,000–₹50,000. That is around ₹2.5 lakh before HRA or home loan interest. To reach ₹7.08 L you would need ₹4.5 lakh or more from rent and loan interest alone — possible with a large home loan in a metro, unusual otherwise.
For most people at this salary the calculation is settled: stay on the new regime and stop revisiting it every March.
Since deductions are largely closed to you, what remains is how your package is composed — and the one item that genuinely reduces taxable income under the new regime is employer NPS under Section 124(2).
Up to 14% of basic salary, contributed by your employer, is deductible. On a ₹20 lakh package with ₹8 lakh basic that is up to ₹1.12 lakh a year out of taxable income — worth roughly ₹35,000 in tax at your marginal rate.
It is not a benefit you claim; it has to be part of your salary structure. Ask HR whether the company offers it and whether you can restructure into it. Many large employers do and never advertise it.
| Step | Amount |
|---|---|
| Gross salary | ₹20,00,000 |
| Standard deduction (s.19(1) Table Sl. No. 2) | −₹75,000 |
| Taxable income | ₹19,25,000 |
| Slab tax (s.202) | ₹1,85,000 |
| Health and education cess (4%) | ₹7,400 |
| Total income tax | ₹1,92,400 |
| Gross salary after income tax | ₹18,07,600 |
This page starts from gross salary, not CTC. It shows income tax only — provident fund, professional tax and other payroll deductions are separate and excluded.
| Gross salary | Income tax | Effective rate | After income tax |
|---|---|---|---|
| ₹5 Lakh | ₹0 | 0.0% | ₹5.00 L |
| ₹7 Lakh | ₹0 | 0.0% | ₹7.00 L |
| ₹10 Lakh | ₹0 | 0.0% | ₹10.00 L |
| ₹12 Lakh | ₹0 | 0.0% | ₹12.00 L |
| ₹15 Lakh | ₹97,500 | 6.5% | ₹14.03 L |
| ₹20 Lakh | ₹1.92 L | 9.6% | ₹18.08 L |
| ₹25 Lakh | ₹3.20 L | 12.8% | ₹21.80 L |
| ₹30 Lakh | ₹4.76 L | 15.9% | ₹25.24 L |
| ₹50 Lakh | ₹11.00 L | 22.0% | ₹39.00 L |
| ₹1 Crore | ₹29.26 L | 29.3% | ₹70.74 L |
New regime, Tax Year 2026-27 and FY 2026-27. Includes the ₹75,000 standard deduction, Section 156(2)(a) rebate, marginal relief, surcharge and 4% cess. Excludes professional tax and employee PF, which are deducted separately.
On a gross salary of ₹20 Lakh, income tax under the new regime for Tax Year 2026-27 and FY 2026-27 is approximately ₹1.92 L including 4% cess. Taxable income after the ₹75,000 standard deduction is ₹19.25 L.
The new regime, unless your total deductions exceed roughly ₹7.08 L a year. Below that threshold the new regime pays less tax. The Income Tax Department publishes an official comparison calculator.
After income tax of ₹1.92 L, roughly ₹18.08 L of your gross salary remains. Note this is gross salary, not CTC — employer PF, the gratuity provision and A target variable component may be paid separately. Any amount actually paid is salary cash and is taxable in that year., and employee PF and professional tax are deducted separately.
Yes. The ₹75,000 standard deduction is available under the new regime for salaried taxpayers and pensioners, and is applied automatically by your employer. You do not claim it.
Related: Income Tax Calculator · Salary Calculator · Old vs New Regime · Section 80C Guide · All salary levels
A note on section numbers. The Income-tax Act, 2025 replaced the Income-tax Act, 1961 with effect from 1 April 2026. Section numbers on this page are those of the 2025 Act. Where you know a provision by its old number, the mapping is: 115BAC → 202, 87A → 156, 16(ia) → 19, 80CCD(2) → 124, 112A → 198, 10(10) → 19(1) Table Sl. Nos. 3-6.
The official pages this page is checked against. If one of them disagrees with us, it wins.
Written and checked by the PaisaSamajh editorial desk · Last reviewed: 24 August 2026 · How we check this →