New regime: tax on ₹40 lakh, slab by slab
The ₹75,000 standard deduction brings taxable income down to ₹39,25,000. Each band of that income is taxed at its own rate:
| Income band | Rate | Income in band | Tax |
|---|---|---|---|
| Up to ₹4,00,000 | Nil | ₹4,00,000 | ₹0 |
| ₹4,00,000–₹8,00,000 | 5% | ₹4,00,000 | ₹20,000 |
| ₹8,00,000–₹12,00,000 | 10% | ₹4,00,000 | ₹40,000 |
| ₹12,00,000–₹16,00,000 | 15% | ₹4,00,000 | ₹60,000 |
| ₹16,00,000–₹20,00,000 | 20% | ₹4,00,000 | ₹80,000 |
| ₹20,00,000–₹24,00,000 | 25% | ₹4,00,000 | ₹1,00,000 |
| ₹24,00,000–₹39,25,000 | 30% | ₹15,25,000 | ₹4,57,500 |
| Tax at slab rates | ₹7,57,500 | ||
| Health and education cess (4%) | ₹30,300 | ||
| Total tax | ₹7,87,800 | ||
Your top slab is 30%, but your overall rate is only 19.7% of the salary, because the lower bands are taxed at lower rates. Surcharge only starts above ₹50 lakh of taxable income.
Old regime: tax on ₹40 lakh with common deductions
The old regime has higher rates and a ₹50,000 standard deduction, but lets you subtract deductions. For a resident under 60:
| Deductions | Taxable income | Tax |
|---|---|---|
| No deductions | ₹39,50,000 | ₹10,37,400 |
| ₹1.5 lakh investments + ₹25,000 health insurance | ₹37,75,000 | ₹9,82,800 |
| Plus ₹2 lakh home loan interest | ₹35,75,000 | ₹9,20,400 |
| Plus ₹50,000 extra NPS | ₹35,25,000 | ₹9,04,800 |
Which regime is better on a ₹40 lakh salary?
The old regime only comes out ahead if your deductions, on top of the standard deduction, add up to more than about ₹8,00,000. With the common ₹1.75 lakh, the new regime saves you ₹1,95,000 a year. The new regime applies unless you choose the old one.
Monthly take-home on a ₹40 lakh salary
| Gross salary a month | ₹3,33,333 |
| Income tax a month (new regime) | − ₹65,650 |
| Take-home before PF and other deductions | ₹2,67,683 |
|---|
This is gross salary less income tax. Your in-hand pay is lower still after your own PF and professional tax: work it out from your CTC with the in-hand salary calculator.
Same salary, different situations
Age only changes the old regime, where residents aged 60–79 pay no tax on the first ₹3 lakh and those 80 or older on the first ₹5 lakh. Interest, rent after its deductions and freelance income are added on top of your salary, without a second standard deduction.
| Situation | Tax | Difference |
|---|---|---|
| Age 60–79, old regime with ₹1.75 lakh of deductions | ₹9,80,200 | New regime unchanged |
| Age 80 or older, old regime with ₹1.75 lakh of deductions | ₹9,69,800 | New regime unchanged |
| Plus ₹50,000 of FD or savings interest, new regime | ₹8,03,400 | + ₹15,600 vs salary alone |
| Plus ₹1 lakh of other income, new regime | ₹8,19,000 | + ₹31,200 vs salary alone |
How the tax changes with salary
- On ₹35 lakh, new-regime tax is ₹6,31,800 (income tax on ₹35 lakh salary).
- On ₹50 lakh, it is ₹10,99,800 (income tax on ₹50 lakh salary).
- The next ₹1 lakh of salary would add ₹31,200 of tax in the new regime.
Have other income or different deductions? Interest, rent, HRA and age all change the answer. Open this salary in the income tax calculator to compare both regimes with your own figures.
Frequently asked questions
How much income tax is payable on a ₹40 lakh salary in 2026-27?
Which tax regime is better for a ₹40 lakh salary?
What is the take-home pay on a ₹40 lakh salary?
Which tax slab does a ₹40 lakh salary fall in?
How can I reduce tax on a ₹40 lakh salary?
Figures are for tax year 2026-27 under the Income-tax Act, 2025, for a resident individual under 60 whose only income is this gross salary (before your PF contribution), rounded to the nearest rupee. They are estimates, not tax advice.