Salary feels smaller than it is

A ₹15 lakh salary can shrink three different times before it feels usable: once in payroll, once in income tax, and once at the cash register when spending triggers Goods and Services Tax. That is the logic behind chartered accountant Nitin Kaushik’s April 9 illustration that a “good salary” can feel much smaller in real life. (livemint.com) In India, salaried employees do not start with full control over gross pay, because payroll often slices off retirement money before salary hits the bank. The Employees’ Provident Fund Organisation says the employee contribution is 12 percent of basic wages plus dearness allowance, and many employers use that deduction every month. (epfindia.gov.in) That retirement deduction is not a “loss” in the long run, but it is still money you cannot spend on rent, school fees, or groceries this month. A worker seeing ₹1.25 lakh as monthly gross from a ₹15 lakh annual package can feel poorer immediately if provident fund, professional tax, and other payroll cuts land before payday. (epfindia.gov.in) The second cut is income tax, and this is where salary structure starts to matter more than the headline number. India’s tax system still lets salaried people choose between an old regime with more deductions and a new regime with lower slab rates but fewer breaks, so two people earning the same ₹15 lakh can owe different amounts. (incometaxindia.gov.in) (cleartax.in) The standard deduction alone shows how much the choice can move the number. For financial year 2025-26, ClearTax summarizes the salaried standard deduction as ₹50,000 under the old regime and ₹75,000 under the new regime, which changes taxable income before any slab rate is applied. (cleartax.in) Under the old regime, the official slab structure still climbs from nil up to ₹2.5 lakh, to 5 percent from ₹2.5 lakh to ₹5 lakh, to 20 percent from ₹5 lakh to ₹10 lakh, and to 30 percent above ₹10 lakh. That means the last ₹5 lakh of a ₹15 lakh salary is taxed at the highest slab even before the 4 percent health and education cess is added. (incometaxindia.gov.in) Then comes the third cut, which is the one people feel every weekend instead of every payslip. India’s Goods and Services Tax is built into what you pay for many services and products, and the Central Board of Indirect Taxes and Customs lists a large share of services in the 18 percent bracket. (cbic-gst.gov.in) That means take-home pay is not the same as spendable purchasing power. If part of your post-tax income goes to restaurant bills, phone plans, salon visits, repairs, insurance add-ons, or other taxed consumption, another layer of money leaves after salary has already been taxed once. (cbic-gst.gov.in) Kaushik’s ₹15 lakh-to-₹9 lakh style example is not a legal tax computation for every worker, and Mint framed it as a practical warning about shrinking take-home rather than a universal formula. The point is that gross salary, net salary, and after-spending reality are three different numbers, and salaried households often budget using the first one when only the third one decides lifestyle. (livemint.com) The people who manage this gap best usually do not earn differently first; they structure differently first. Regime choice, salary components, provident fund treatment on higher wages, and which deductions still survive under the old regime can all change how much of ₹15 lakh actually reaches the bank and how much buying power survives after spending. (epfindia.gov.in) (cleartax.in)