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Tax Story — Mid-Career Salaried

₹18L Salary Tax Story: HRA + 80C + Home Loan — New Regime Still Wins

Meera (Bengaluru, ₹17L gross): HRA exempt ₹2.2L, 80C ₹1.5L, 80D ₹25k, home-loan interest ₹1.8L — old regime tax ₹1,40,400 vs new ₹1,30,000. New wins by ₹10,400. Full working below.

Meera's numbers (FY 2026-27)

ItemAmount
Gross salary (Basic ₹8L + HRA ₹3.5L + other ₹5.5L)₹17,00,000
Rent paid (₹25,000 × 12, Bengaluru)₹3,00,000
HRA exempt — least of 3.5L / (3L − 80k) / 50% × 8L₹2,20,000
80C (EPF+ELSS) / 80D / home-loan interest (24b)₹1,50,000 / ₹25,000 / ₹1,80,000

Old vs new — full working

Old regimeNew regime
Taxable income17L − 0.5 − 2.2 − 1.5 − 0.25 − 1.8 = ₹10,75,00017L − 0.75 = ₹16,25,000
Slab tax + 4% cess₹1,35,000 → ₹1,40,400₹1,25,000 → ₹1,30,000
VerdictNew regime wins by ₹10,400 — even with ₹5.75L of deductions!

5 lessons from Meera

  • Big deductions ≠ old wins. Always compute both — the crossover sits near ₹5–6L of deductions at this salary.
  • Bengaluru's 50% HRA (Rule 279, FY 2026-27) didn't even bind here — rent was the binding number.
  • ITR-1 (salary + interest only) · TDS via employer · 12BB with landlord PAN (rent > ₹1L).
  • Switching regimes next year? Salaried filers choose afresh every ITR.
  • Run your own numbers: 60-second wizard →
Full calculator → · Check your HRA → · Filing checklist →
🤔 What we'd change for the Sharmas (year 2)
Three upgrades: (1) With Bengaluru in the 8-metro list (Rule 279), re-run HRA at the 50% cap — the rent-minus-10% leg likely still binds, but verify yearly. (2) Split March-panic 80C into a monthly ELSS SIP from April — same deduction, better averaging, zero March stress. (3) Check employer NPS: 14% of Basic under Sec 125 survives even in new regime — often the single biggest missed deduction for ₹15L+ earners.
📌 Remember: rent trail > rent receipts
The Sharmas pay ₹25,000/month rent — in the crackdown era, HOW matters as much as how-much: monthly bank transfers + registered (or notarized) agreement + landlord PAN on file. Cash rent with handwritten receipts is precisely the pattern verification flags. Eleven-month notarized agreements are the common minimum; for large HRA claims, a registered agreement + NEFT trail is scrutiny-proofing that costs almost nothing.

By TaxSetu Editorial Team · Last reviewed: 7 October 2026

Based on the Income-tax Act 2025, Income Tax Rules 2026 and CBDT notifications; sections per the Income-tax Act 1961 (as amended) with 2025-Act mappings where notified · Verify on the official portal: incometax.gov.in

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Frequently Asked Questions

New regime wins here: ₹1,30,000 vs ₹1,40,400 in old — a ₹10,400 gap despite ₹5.75L of deductions. Run your own: 60-second wizard.

Least of actual HRA ₹3.5L, rent-minus-10% (₹3L − ₹80k = ₹2.2L), and 50% of Basic (Bengaluru metro). Rent was binding. HRA calculator.

ITR-1 — salary plus interest only. Collect Form 16, match AIS/26AS, e-verify in 30 days. Checklist.