New vs Old Regime for ₹20 LPA: Tax Breakeven Comparison
At ₹20 LPA CTC, high earners often juggle HRA, home loan interest (Section 24), and Section 80C. This page calculates the exact deduction threshold required for the Old Regime to beat the New Regime.
Direct Summary: New vs Old Regime for ₹20 LPA: Tax Breakeven Comparison
At ₹20 LPA CTC, high earners often juggle HRA, home loan interest (Section 24), and Section 80C. This page calculates the exact deduction threshold required for the Old Regime to beat the New Regime.
- Key Takeaway: Breakeven deduction is ~₹4.75 Lakh. You need over ₹4.75 Lakh in combined 80C, 80D, HRA, and home loan interest for the Old Regime to save more tax.
- Key Rule: CTC: ₹20,00,000 per annum
- Key Rule: New Regime tax: ~₹2.60 Lakh
Breakeven deduction is ~₹4.75 Lakh. You need over ₹4.75 Lakh in combined 80C, 80D, HRA, and home loan interest for the Old Regime to save more tax.
Use our free interactive tool to adjust inputs, change tenure, or test tax regimes in real-time.
How This Calculation Works
In-hand salary is computed by deducting statutory employee contributions and taxes from your Cost to Company (CTC). Under the New Tax Regime for Tax Year 2026-27 (Income Tax Act, 2025), a standard deduction of ₹75,000 is subtracted from gross salary. Section 87A rebate provides relief of up to ₹60,000 for taxable income up to ₹12 Lakh, ensuring zero tax liability for salaried income up to ₹12.75 Lakh.
Section 115BAC Salary & Tax Slab Breakdown
| Salary Component | Calculation Basis & Act Section | Annual (₹) | Monthly (₹) |
|---|---|---|---|
| Cost to Company (CTC) | Annual gross employment contract value | ₹20,00,000.00 | ₹1,66,667.00 |
| Less: Employer PF Contribution | 12% of basic (statutory ceiling ₹21,600/yr) | - ₹21,600.00 | - ₹1,800.00 |
| Gross Taxable Salary | CTC minus employer social security | ₹19,78,400.00 | ₹1,64,867.00 |
| Less: Standard Deduction | Section 16(ia) flat deduction (Tax Year 2026-27) | - ₹75,000.00 | - ₹6,250.00 |
| Net Taxable Income (Section 115BAC) | Tax computation base after Section 16(ia) | ₹19,03,400.00 | ₹1,58,617.00 |
| Income Tax on Slabs (0–24L+) | Tax Year 2026-27 7-tier revised tax slabs | ₹1,80,680.00 | ₹15,057.00 |
| Less: Section 87A Tax Rebate | Not applicable (Income > ₹12 Lakh) | -₹0.00 | -₹0.00 |
| Health & Education Cess (4%) | Statutory 4% on net income tax payable | ₹7,227.20 | ₹602.00 |
| Total Annual Income Tax (TDS) | Net tax liability withheld by employer | ₹1,87,907.00 | ₹15,659.00 |
| Less: Employee PF Contribution | 12% of basic retirement savings | - ₹21,600.00 | - ₹1,800.00 |
| Less: Professional Tax (PT) | State statutory municipal levy (avg ₹200/mo) | - ₹2,400.00 | - ₹200.00 |
| Net In-Hand Take-Home Cash (Credited to Bank) | ₹17,66,493.00 | ₹1,47,207.75 | |
Calculation Assumptions
- CTC: ₹20,00,000 per annum
- New Regime tax: ~₹2.60 Lakh
- Old Regime tax: ~₹3.82 Lakh without deductions
Typical Calculation Scenario
Calculation based on target inputs: ctc=2000000
Important Statutory & Regulatory Notes
- •Statutory Slabs: Tax Year 2026-27 slabs (Income Tax Act, 2025): 0-4L Nil, 4-8L 5%, 8-12L 10%, 12-16L 15%, 16-20L 20%, 20-24L 25%, >24L 30%.
- •Section 87A Rebate: Full rebate on tax payable up to ₹60,000 for taxable income up to ₹12 Lakh (salaried up to ₹12.75L with standard deduction).
- •Provident Fund Rules: Employee PF is 12% of basic salary. Statutory minimum wage EPF ceiling is ₹1,800/month (12% of ₹15,000) if opted by employer.
- •Professional Tax: Levied by state governments (typically capped at ₹2,500/year or ₹200/month per Article 276(2) of the Constitution).
Frequently Asked Questions
Is New or Old Tax Regime better for ₹20 LPA?
The New Tax Regime is simpler and saves tax for most ₹20 LPA employees unless total deductions exceed ₹4.75 Lakh.
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