Why a ₹10 LPA Salary is 100% Income Tax Free
Under Section 115BAC (New Tax Regime), salaried employees receive a flat ₹75,000 Standard Deduction. Deducting this from a ₹10,00,000 gross package leaves ₹9,25,000 taxable income. Since this is comfortably within the statutory ₹12,00,000 rebate ceiling under Section 87A, your total income tax liability is completely rebated, resulting in Zero (₹0) Net Income Tax.
Where Does the Rest of Your ₹10 Lakh Go?
Even though income tax is zero, your monthly in-hand is not ₹83,333 (₹10 Lakh / 12). Indian corporate employers deduct mandatory Employee Provident Fund (EPF at 12% of Basic) and state Professional Tax (approx. ₹200/month). The EPF contribution accumulates in your EPFO account with sovereign government-backed interest.
Frequently Asked Questions
What is the exact monthly take-home for 10 LPA under the New Tax Regime?
With standard 40% basic pay and 12% employee EPF, your monthly in-hand salary is approximately ₹75,700 per month with ₹0 tax deducted.
Is Old Tax Regime better for a 10 LPA salary?
No. Under the Old Tax Regime, you would have to show huge investments in 80C, 80D, and HRA just to avoid tax. The New Regime grants 100% tax exemption automatically without forcing you to lock up money in financial products.
Does 10 LPA CTC include employer EPF contribution?
Yes. In almost all Indian private company offer letters, the CTC includes both employer and employee PF contributions.