Mr. Ayushmann Khurana has just received his Form 16. His annual salary package (including employer’s NPS contribution) is Rs. 15 lakh, and everyone around him is giving different answers about how much income tax he has to pay.
One friend says, “There’s no tax up to Rs. 12 lakh now.”
Another says, “You still have to pay nearly Rs. 1 lakh.”
If your annual salary is Rs. 15 lakh, you’re probably asking the same questions:
- How much income tax will I actually pay?
- How is my taxable income calculated under the new tax regime?
- Can I reduce my tax ?
If you have similar questions, this article will help you understand the tax calculation through a practical example.
The good news is that under the new tax regime for FY 2025-26, salaried employees continue to enjoy the benefit of the standard deduction and can also claim deduction for the employer’s contribution to NPS under Section 80CCD(2), subject to prescribed limits.
Let’s understand Mr. Ayushmann Khurana’s case step by step.
What You’ll Learn in This Article
In this practical case study, you’ll learn:
- How tax is calculated on a Rs. 15 lakh salary.
- How the standard deduction works.
- How the deduction under Section 80CCD(2) for the employer’s NPS contribution reduces taxable income.
- Step-by-step income tax calculation under the new tax regime.
- Tax liability before and after marginal relief.
- Common mistakes salaried employees make while filing ITR.
Mr. Ayushmann Khurana’s Situation
Mr. Ayushmann Khurana is a salaried employee working at a Central Government hospital in Delhi.
During the Financial Year 2025-26, he received the following salary package.
| Particulars | Amount |
| Annual Basic Salary | Rs. 7,50,000 |
| Dearness Allowance ( DA) | Rs. 4,50,000 |
| Transport Allowance (TA) | Rs. 1,32,000 |
| Gross Salary | Rs. 13,32,000 |
| Add: Employer’s Contribution to NPS | Rs. 1,68,000 |
| Salary Income | Rs. 15,00,000 |
Let’s calculate his income tax step by step.
Step 1: Determine the Salary Income
Mr. Ayushmann Khurana’s annual salary income is:
Salary Income = Rs. 15,00,000
The employer’s contribution to NPS is first included in salary income and is subsequently allowed as a deduction under Section 80CCD(2), subject to the prescribed conditions.
Step 2: Claim Deduction for Employer’s NPS Contribution under Section 80CCD(2)
Under the new tax regime, salaried employees are eligible for a Standard Deduction of Rs. 75,000.
| Particulars | Amount |
| Salary Income | Rs. 15,00,000 |
| Less: Standard Deduction | Rs. 75,000 |
| Income under the head “Salaries” | Rs. 14,25,000 |
Step 3: Claim Deduction for Employer’s NPS Contribution
One of the biggest tax-saving benefits available under the new tax regime is the deduction for the Employer’s contribution to NPS under Section 80CCD(2).
Eligible employer contribution = 14% × (Basic Salary + Dearness Allowance)
Basic Salary = Rs. 7,50,000
Dearness Allowance = Rs. 4,50,000
Calculation:
[Rs 7,50,000 + Rs. 4,50,000 ] x 14% = Rs. 1,68,000
Since this contribution is within the prescribed limit, the entire amount is deductible.
| Particulars | Amount |
| Income under the head “Salaries” | Rs. 14,25,000 |
| Less: Employer’s NPS Contribution under Section 80CCD(2) | Rs. 1,68,000 |
| Total Taxable Income | Rs. 12,57,000 |
Step 4: Calculate Income Tax As Per Slab Rates Under the New Tax Regime
Now tax will be calculated on Rs. 12,57,000.
Income Tax Slabs (FY 2025-26)
| Income Slab | Tax Rate |
| Up to Rs. 4,00,000 | Nil |
| Rs. 4,00,001 – Rs. 8,00,000 | 5% |
| Rs. 8,00,001 – Rs. 12,00,000 | 10% |
| Rs. 12,00,001 – Rs. 16,00,000 | 15% |
| Rs. 16,00,001 – Rs. 20,00,000 | 20% |
| Rs. 20,00,001 – Rs. 24,00,000 | 25% |
| Above Rs. 24,00,000 | 30% |
Tax Calculation
| Income Slab | Tax |
| Up to Rs. 4,00,000 | Nil |
| Rs. 4,00,001–Rs. 8,00,000 (Rs. 4,00,000 × 5%) | Rs. 20,000 |
| Rs. 8,00,001–Rs. 12,00,000 (Rs. 4,00,000 × 10%) | Rs. 40,000 |
| Rs. 12,00,001–Rs. 12,57,000 (Rs. 57,000 × 15%) | Rs. 8,550 |
Income tax before marginal relief and cess = Rs. 68,550
Also Read: Want to understand how the Section 87A Rebate works? Read our detailed guide to know who is eligible, the rebate limits, and how it can help reduce your income tax liability.
Step 5: Calculate Marginal Relief under Section 87A
Since Mr. Ayushmann Khurana’s taxable income exceeds Rs. 12 lakh, he is not eligible for the rebate under Section 87A.
However, he is eligible for marginal relief, which ensures that the additional tax payable does not exceed the amount by which his income exceeds Rs. 12 lakh.
Calculation of marginal relief:
Additional taxable Income above Rs. 12,00,000 = Rs. 12,57,000 − Rs. 12,00,000 = Rs. 57,000
Income tax before marginal relief and cess = Rs. 68,550
Marginal Relief = Income Tax Before Relief − Excess Income over Rs. 12,00,000
Marginal Relief = Rs. 68,550 − Rs. 57,000 = Rs. 11,550
Final Tax Calculation Summary
| Particulars | Amount |
| Salary Income | Rs. 15,00,000 |
| Less: Standard Deduction | Rs. 75,000 |
| Less: Employer’s NPS deduction under Section 80CCD(2) | Rs. 1,68,000 |
| Taxable Income | Rs. 12,57,000 |
| Income Tax | Rs. 68,550 |
| Less: Marginal Relief | Rs. 11,550 |
| Income Tax Payable after marginal relief | Rs. 57,000 |
| Health & Education Cess (4%) | Rs. 2,280 |
| Total Tax Payable | Rs. 59,280 |
Note on TDS and Advance Tax
This article explains the calculation of annual income tax liability. It does not include the calculation of monthly TDS deductions by the employer.
In case of salaried employees, the employer generally deducts TDS from salary every month based on the estimated annual tax liability. The final tax payable or refund while filing the ITR depends on the TDS already deducted during the year and any other income or deductions applicable to the taxpayer.
Understanding Employer’s NPS Benefit
Although most deductions under Chapter VI-A are not available under the new tax regime, the deduction for the employer’s contribution to the National Pension System (NPS) under Section 80CCD(2) continues to be available, subject to the prescribed limits.
Common Mistakes Salaried Employees Make
- Assuming tax is calculated directly on total salary package.
- Forgetting to claim the standard deduction.
- Not claiming the deduction for the employer’s NPS contribution under Section 80CCD(2).
- Confusing the employer’s NPS deduction with the employee’s own NPS investment.
- Choosing the wrong tax regime without comparing both options.
- Not verifying Form 16 before filing the Income Tax Return.
TaxStudyOnline’s Final Takeaway
Before calculating tax on your salary under the new tax regime, remember these important points:
- Income tax is calculated on your taxable income after allowing eligible deductions available under the applicable tax regime.
- Claim the standard deduction of Rs. 75,000.
- The deduction for the employer’s contribution to NPS under Section 80CCD(2) continues to be available.
- Most deductions under Chapter VI-A, such as Section 80C and Section 80D, are not available under the new tax regime.
- Review your salary structure before filing your Income Tax Return (ITR).
- Compare both tax regimes every financial year to determine which one is more beneficial.
Conclusion
Mr. Ayushmann Khurana’s case demonstrates how income tax is calculated on a Rs. 15 lakh salary under the new tax regime for FY 2025-26.
Although his annual salary is Rs. 15 lakh, income tax is not calculated on the entire salary package. After claiming the standard deduction of Rs. 75,000 and the deduction for the employer’s contribution to NPS under Section 80CCD(2) of Rs. 1,68,000, his taxable income comes down to Rs. 12.57 lakh.
Since his taxable income only slightly exceeds Rs. 12,00,000, he is eligible for marginal relief.
Based on the applicable tax slabs, his total tax liability after marginal relief , including 4% Health and Education Cess, is Rs. 59,280.
Understanding your salary structure, available deductions, and NPS benefits can help you calculate your tax correctly, avoid filing mistakes, and make informed financial decisions.
FAQ’s
1. Is the Rs. 75,000 standard deduction available under the new tax regime?
Yes. Salaried employees and pensioners can claim a standard deduction of Rs. 75,000 under the new tax regime for FY 2025-26.
2. Can I claim NPS deduction under the new tax regime?
Under the new tax regime, you can claim a deduction for your employer’s contribution to the NPS under Section 80CCD(2). The deduction is allowed up to 14% of your salary (basic salary plus dearness allowance, if applicable) in case of Central Government employees.
3. Is my own NPS investment deductible under the new tax regime?
No. The deduction under Section 80CCD(1B) for your own NPS contribution is not available under the new tax regime.
4. Can I claim a deduction for my employer’s contribution to NPS under the new tax regime?
Yes. The employer’s contribution to NPS under Section 80CCD(2) continues to be allowed.
5. Can I claim deduction under Section 80C?
No. The deduction under Section 80C is not available under the new tax regime.
