Income Tax on 10 Lakh Salary in India: Old vs New Regime 2026-27

Calculating income tax on a 10 lakh salary in India can be complex, but with the right guidance, you can make informed decisions about your finances

In India, the financial year 2026-27 brings new tax rules and regulations, making it essential for individuals with a 10 lakh salary to understand the implications of the old and new tax regimes on their income tax liability, CalcBaba provides practical advice and tools to help you navigate these changes, as a leading personal finance website in India, we offer expert guidance on managing your finances effectively, whether you are a salaried individual or a business owner, our goal is to provide you with the knowledge and resources you need to make informed decisions about your money

The Indian government has introduced several tax reforms in recent years, aiming to simplify the tax system and encourage compliance, the new tax regime, introduced in 2020, offers lower tax rates and fewer deductions, but it also means that individuals may need to re-evaluate their tax planning strategies, in this article, we will explore the income tax implications of a 10 lakh salary in India, comparing the old and new tax regimes, and providing you with the information you need to make informed decisions about your finances

Understanding the Old Tax Regime

The old tax regime in India is based on a slab system, where tax rates increase as income levels rise, for a 10 lakh salary, the tax rates would be 5% on income between 2.5 lakh and 5 lakh, 10% on income between 5 lakh and 7.5 lakh, and 15% on income between 7.5 lakh and 10 lakh, additionally, there are deductions and exemptions available, such as the standard deduction of 50,000 rupees, and exemptions on investments in instruments like public provident funds and life insurance policies, these deductions and exemptions can help reduce your taxable income, and consequently, your tax liability, for example, if you invest 1 lakh rupees in a public provident fund, you can claim a deduction of 1 lakh rupees under section 80C, which can help reduce your taxable income

• Standard deduction of 50,000 rupees
• Exemptions on investments in public provident funds and life insurance policies
• Deductions on home loan interest and principal repayment

Understanding the New Tax Regime

The new tax regime in India offers lower tax rates and fewer deductions, the tax rates for a 10 lakh salary would be 5% on income between 2.5 lakh and 5 lakh, 10% on income between 5 lakh and 7.5 lakh, and 15% on income between 7.5 lakh and 10 lakh, however, the new regime does not offer deductions and exemptions, such as the standard deduction, or exemptions on investments in instruments like public provident funds and life insurance policies, this means that individuals may need to re-evaluate their tax planning strategies, and consider alternative investment options, such as mutual funds or stocks, for example, if you invest 1 lakh rupees in a mutual fund, you may be able to claim a deduction under section 80C, but the rules and regulations surrounding this deduction are complex, and require careful consideration

• Lower tax rates
• Fewer deductions and exemptions
• Alternative investment options

Comparing the Old and New Tax Regimes

When comparing the old and new tax regimes, it is essential to consider your individual circumstances, and the deductions and exemptions available to you, if you have significant investments in instruments like public provident funds and life insurance policies, the old regime may be more beneficial, however, if you have fewer deductions and exemptions, the new regime may offer lower tax rates, and a simpler tax system, for example, if you have a home loan, you may be able to claim a deduction on the interest and principal repayment under the old regime, but this deduction is not available under the new regime, on the other hand, if you have a high income, and few deductions and exemptions, the new regime may offer lower tax rates, and a more straightforward tax system

• Consider your individual circumstances
• Evaluate the deductions and exemptions available
• Compare the tax rates and simplicity of the two regimes

Tax Planning Strategies for a 10 Lakh Salary

To minimize your tax liability, it is essential to have a tax planning strategy in place, this may involve investing in tax-saving instruments, such as public provident funds, life insurance policies, and mutual funds, or claiming deductions on home loan interest and principal repayment, additionally, you may want to consider consulting a tax professional, or using online tax planning tools, to ensure that you are taking advantage of all the deductions and exemptions available to you, for example, if you invest 1 lakh rupees in a public provident fund, you can claim a deduction of 1 lakh rupees under section 80C, which can help reduce your taxable income, and consequently, your tax liability, it is also important to review your tax planning strategy regularly, to ensure that it remains effective, and aligned with your changing financial circumstances

• Invest in tax-saving instruments
• Claim deductions on home loan interest and principal repayment
• Consult a tax professional or use online tax planning tools

Using Tax Calculators and Planning Tools

Tax calculators and planning tools can be a valuable resource, when it comes to understanding your tax liability, and planning your tax strategy, these tools can help you calculate your tax liability, and identify potential deductions and exemptions, additionally, they can provide you with a clear and concise overview of your tax situation, and help you make informed decisions about your finances, for example, the income tax calculator on the CalcBaba website can help you calculate your tax liability, and identify potential deductions and exemptions, it can also provide you with a detailed breakdown of your tax calculation, and help you understand how different tax planning strategies may impact your tax liability, by using tax calculators and planning tools, you can ensure that you are taking advantage of all the deductions and exemptions available to you, and minimizing your tax liability

• Calculate your tax liability
• Identify potential deductions and exemptions
• Get a clear and concise overview of your tax situation