Compare Old vs New Tax Regime for Central Government employees with all eligible deductions
Cash gross as per payslip (Basic + DA + HRA + TA etc. actually received). Do NOT add employer NPS — the calculator handles it. Note: PFMS/GIFMIS "Actual Gross" already INCLUDES the govt 14% NPS, which is why PFMS then deducts it under Chapter VI — same maths, different starting point. PFMS gross = this gross + 14% of Basic+DA.
Annual gross from salary slip (Basic+DA+HRA+TA+all allowances)
Used to compute employer NPS (14%): added to income u/s 17 and fully deducted u/s 80CCD(2) — tax-free in your hands, net-zero to tax
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 first added to income u/s 17 and then fully deducted under both Old and New regimes — making the employer’s 14% contribution completely tax-free in your hands (private-sector employees get this only up to 10% of Basic+DA). Note: it does not further reduce tax on your cash salary.
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. This amount is added to your income u/s 17 and fully deducted u/s 80CCD(2) — you pay zero tax on a ₹1.12L retirement benefit (worth roughly ₹35,000 at the 30% slab compared to it being taxable). It is not an extra deduction against your cash salary.
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 — in both regimes. But note how it works: the employer’s contribution (14% of Basic+DA for govt employees) is first included in your salary u/s 17 and then fully deducted u/s 80CCD(2). Net effect: the contribution is tax-free in your hands. It is not an additional deduction from your cash salary, so it does not lower the tax on what you actually receive.
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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