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Income tax on ₹40 lakh salary

Tax on a ₹40 lakh annual salary for FY 2026-27 (tax year 2026-27), worked out slab by slab under the new and old regime.

Last reviewed

Tax, new regime₹7,87,80019.7% effective rate
Tax, old regime₹9,82,020with 80C, 80D and professional tax
Lower taxNew regimesaves ₹1,94,220
Monthly tax (TDS)₹65,650new regime

Your income

Annual figures for FY 2026-27 (tax year 2026-27).

Your age
₹
₹0₹1 Cr
Other incomeInterest, rent, freelance (taxed at slab rates)₹
Employer's NPS contributionAllowed in both regimes₹
Deductions (old regime only)The new regime ignores these. Limits are applied automatically.
  • 80C investmentsEPF, PPF, ELSS, life insurance, home loan principal, tuition fees · up to ₹1.5 L₹
  • Health insurance (80D)Premiums for self, family and parents · up to ₹1 L₹
  • HRA exemptionWork it out with the HRA calculator₹
  • Home loan interestSelf-occupied house · up to ₹2 L₹
  • Own NPS contributionOver and above 80C (80CCD(1B)) · up to ₹50K₹
  • Professional taxDeducted by your employer · up to ₹2.5K₹
  • Other deductionsEducation loan interest, donations, etc.₹

Old vs new regime

Your tax under both regimes, including cess and any surcharge.

New regimeLower tax₹7,87,800₹65,650 a month · 19.7% effective rate
Old regime₹9,82,020₹81,835 a month · 24.6% effective rate
The new regime saves you ₹1,94,220 a year.That is ₹16,185 a month more in hand. Take-home after tax: ₹32,12,200 a year.
  • The old regime only wins if your deductions reach about ₹8,00,500, ₹6,23,000 more than you have now.
  • Your top slab is 30% in the new regime, so each extra ₹1,000 of income costs about ₹312 in tax.

Tax computation

Line by line, as your employer or the ITR would work it out.

ItemNew regimeOld regime
Gross income₹40,00,000₹40,00,000
Standard deduction− ₹75,000− ₹50,000
Professional tax—− ₹2,500
80C investments—− ₹1,50,000
Health insurance (80D)—− ₹25,000
Taxable income₹39,25,000₹37,72,500
Tax at slab rates₹7,57,500₹9,44,250
Rebate (Section 156, earlier 87A)——
Marginal relief——
Surcharge₹0₹0
Health & education cess (4%)₹30,300₹37,770
Total tax₹7,87,800₹9,82,020

How your income falls into the slabs

Each slab's rate applies only to the income inside it.

  • ₹0 – ₹4 L0%₹4,00,000 taxed₹0
  • ₹4 L – ₹8 L5%₹4,00,000 taxed₹20,000
  • ₹8 L – ₹12 L10%₹4,00,000 taxed₹40,000
  • ₹12 L – ₹16 L15%₹4,00,000 taxed₹60,000
  • ₹16 L – ₹20 L20%₹4,00,000 taxed₹80,000
  • ₹20 L – ₹24 L25%₹4,00,000 taxed₹1,00,000
  • Above ₹24 L30%₹15,25,000 taxed₹4,57,500

The details

Tax calculation on ₹40 lakh (new regime)

  • Gross salary: ₹40,00,000
  • Less standard deduction: ₹75,000
  • Taxable income: ₹39,25,000
  • ₹0 – ₹4 L at 0%: ₹0
  • ₹4 L – ₹8 L at 5%: ₹20,000
  • ₹8 L – ₹12 L at 10%: ₹40,000
  • ₹12 L – ₹16 L at 15%: ₹60,000
  • ₹16 L – ₹20 L at 20%: ₹80,000
  • ₹20 L – ₹24 L at 25%: ₹1,00,000
  • Above ₹24 L at 30%: ₹4,57,500
  • Cess at 4%: ₹30,300
  • Total tax: ₹7,87,800

When does the old regime win?

New regime tax on ₹40 lakh: ₹7,87,800. Old regime tax with different deductions:

Old-regime deductionsOld regime taxCheaper
No deductions₹10,36,620New
80C ₹1.5 lakh₹9,89,820New
+ 80D ₹25,000 + NPS ₹50,000₹9,66,420New
+ HRA ₹2 lakh + home loan interest ₹2 lakh₹8,41,620New

Break-even: the old regime needs about ₹8,01,000 of deductions to match the new regime at this salary.

Compared with nearby salaries

New regime tax and old regime tax with 80C and 80D:

SalaryNew regimeOld regime
₹28 lakh₹4,13,400₹6,07,620
₹30 lakh₹4,75,800₹6,70,020
₹35 lakh₹6,31,800₹8,26,020
₹40 lakh₹7,87,800₹9,82,020
₹45 lakh₹9,43,800₹11,38,020
₹50 lakh₹10,99,800₹12,94,020
₹60 lakh₹15,52,980₹17,66,622

See what you take home each month on the ₹40 lakh CTC salary page.

Frequently asked questions

How much income tax do I pay on a ₹40 lakh salary?

For FY 2026-27, a ₹40 lakh salary attracts ₹7,87,800 of tax in the new regime, including 4% cess. In the old regime, with ₹1.5 lakh under 80C, ₹25,000 health insurance and ₹2,500 professional tax, the tax is ₹9,82,020.

Which regime is better for a ₹40 lakh salary?

The new regime, unless your old-regime deductions (beyond the standard deduction) exceed about ₹8,01,000.

What is the monthly take-home on a ₹40 lakh salary after tax?

About ₹2,67,683 a month after income tax in the new regime. PF and professional tax reduce it further; see the in-hand salary page for the full picture.

What is my tax slab on a ₹40 lakh salary?

After the ₹75,000 standard deduction your taxable income is ₹39,25,000, which puts your top slab at 30% in the new regime. Your effective tax rate is 19.7%.

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Results are estimates for illustration, not tax or financial advice.