On a ₹12.5 LPA CTC you take home about ₹98,167 a month, or ₹11,78,000 a year: 94% of the CTC. There is no income tax at this salary: taxable income comes to ₹11,39,000, under the ₹12 lakh limit, so the rebate cancels the ₹53,900 the slabs would charge.
New tax regime, FY 2026-27 (slabs unchanged by Budget 2026) · basic 40% of CTC · PF on the ₹25,000 wage ceiling
| Earnings | |
|---|---|
| Basic (40% of CTC) | ₹41,667 |
| HRA (50% of basic) | ₹20,833 |
| Special allowance | ₹38,667 |
| Gross salary | ₹1,01,167 |
| Deductions | |
| Your PF (12% of basic, up to ₹3,000) | ₹3,000 |
| Income tax (incl. 4% cess) | ₹0 |
| In hand | ₹98,167 |
Your employer also pays ₹3,000 a month into your PF account. It is part of the ₹1,04,167 monthly CTC but never reaches your bank, which is why the gross salary on the slip is ₹1,01,167 and not the full CTC divided by 12.
| Annual CTC | ₹12,50,000 |
| Less: employer PF for the year (not taxed) | − ₹36,000 |
| Less: standard deduction | − ₹75,000 |
| Taxable income | ₹11,39,000 |
| Slab | Rate | Your income in it | Tax |
|---|---|---|---|
| Up to ₹4,00,000 | 0% | ₹4,00,000 | ₹0 |
| ₹4,00,001 – ₹8,00,000 | 5% | ₹4,00,000 | ₹20,000 |
| ₹8,00,001 – ₹12,00,000 | 10% | ₹3,39,000 | ₹33,900 |
| Tax by the slabs | ₹53,900 | ||
Taxable income is ₹12 lakh or less, so the rebate (up to ₹60,000, the one most people know as Section 87A) cancels the whole ₹53,900. Tax payable: zero.
Basic at ₹12.5 LPA is ₹41,667 a month, above the ₹25,000 wage ceiling. Many large employers take PF on the whole basic anyway: then it is ₹5,000 from you and ₹5,000 from them, instead of ₹3,000 each. In hand falls to ₹94,167 a month — ₹4,000 less — while ₹4,000 more goes into your PF account every month. The PF line on your offer letter or payslip tells you which one you have.
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| Total CTC | ₹1,04,167 |
| Basic salary | ₹41,667 |
| HRA | ₹20,833 |
| Special allowance | ₹38,667 |
| Employer PF (capped) | - ₹3,000 |
| Employee PF | - ₹3,000 |
| Tax (incl. cess) | - ₹0 |
| In-hand | ₹98,167 |
Approximation. New regime, FY 2026-27. Doesn't account for HRA exemption, Sec 80C deductions, or company-specific perks.