Compare Old vs New Tax Regime for Central Government employees with all eligible deductions
Annual gross from salary slip (Basic+DA+HRA+TA+all allowances)
For 80CCD(2) employer NPS deduction calculation
For HRA exemption (Old Regime only)
Maximum ₹1,50,000 — Old Regime only
Up to ₹50,000 additional under 80CCD(1B)
Old Regime only — Up to ₹25K self/family + ₹50K parents 60+
Up to ₹2 lakh for self-occupied — Old Regime only
Fill in the details to see your calculation
Central Government employees enjoy several tax benefits especially through the Section 80CCD(2) employer NPS contribution which is tax-deductible under both Old and New regimes — a unique advantage over private sector employees (who get only 10% NPS deduction here).
New Regime (Default):
Old Regime (Optional):
Cess: 4% Health & Education Cess on tax + surcharge applies to both regimes.
Central Government employees get 14% employer NPS contribution (vs 10% in private sector). This is fully tax-deductible under Section 80CCD(2) — applicable in BOTH regimes, with no upper limit.
Example: For ₹8,00,000 annual Basic+DA, employer NPS = ₹1,12,000 — fully tax-deductible, saving ~₹35,000 tax annually.
If you receive salary arrears (DA arrears, pay arrears, leave encashment, etc.) for previous years, you can claim relief under Section 89(1) by filing Form 10E. This spreads the arrears across the years they relate to, often resulting in lower total tax.
Generally, the Old Regime is better for government employees with: HRA + 80C (₹1.5L) + 80CCD(1B) (₹50K) + Medical (₹25K) + Home Loan, total deductions over ₹3-4 lakh. The New Regime is better for those without significant deductions or with simpler tax profile.
Yes. Section 80CCD(2) — employer NPS contribution — is allowed under both Old and New regimes. This is a major benefit for government employees who get 14% employer contribution.
Salaried employees (including government) can switch between Old and New regime every year by indicating their choice while filing ITR. Self-employed/business income earners can switch only once in lifetime.
Through TDS (Tax Deducted at Source) by your DDO every month. The DDO estimates your annual tax liability and divides it into 12 monthly deductions. You can submit declarations (Form 12BB) to optimize TDS.
GPF withdrawals are fully exempt from tax under Section 10(11), provided you've been a member for at least 5 years. Both contribution AND interest are tax-free at withdrawal.
At retirement: 60% lump sum is tax-free under Section 10(12A). The 40% used to purchase annuity is tax-free at conversion, but the resulting monthly pension is fully taxable as income.
Yes, arrears are added to current year income, possibly pushing you into higher slab. But you can claim Section 89(1) relief by filing Form 10E to spread arrears across the years they relate to. This often reduces tax significantly.
Most special allowances (deputation, hardship, transport for disabled) are exempt up to certain limits. Field allowance, mess allowance, special compensatory allowances may be partially exempt. Each has specific rules under Rule 2BB of Income Tax Rules.
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