🧾 Salary Break-up vs ITR: Why the Two Don’t Always Match

Ever wondered why your salary slip shows ₹10+ lakhs but your Income Tax Return (ITR) shows a much lower income?

You’re not alone. Most salaried individuals get confused when they see a mismatch between:

• Their CTC or gross salary

• The taxable income in their ITR

In this post, we’ll explain why the numbers don’t match — and why they’re not supposed to.

🧠 Understanding the Basics

Before diving in, let’s break it down.

Term	Meaning
CTC (Cost to Company)	Total package offered by employer
Gross Salary	Salary before deductions and exemptions
Taxable Salary	Final salary on which tax is calculated in ITR

🔍 Why Salary and ITR Values Don’t Match

Let’s look at what causes the difference.

1️⃣ Exempt Allowances under Section 10

Your salary includes certain components that are partially or fully tax-exempt.

Examples:

• House Rent Allowance (HRA)

• Leave Travel Allowance (LTA)

• Gratuity

• Food coupons

• Mobile/Internet reimbursements

🧾 These are included in your gross salary, but excluded from taxable salary — provided you submit valid proofs.

2️⃣ Standard Deduction ₹50,000

From FY 2018-19 onwards, every salaried employee gets a flat ₹50,000 deduction from taxable income — automatically.

👉 It doesn’t reflect on your salary slip but reduces your income in ITR.

3️⃣ Professional Tax Deduction

If your state deducts professional tax (e.g., Maharashtra, Karnataka), that amount is:

• Included in salary structure

• Deducted while computing taxable salary

📌 Claimable under Section 16(iii) in the old regime.

4️⃣ Chapter VI-A Deductions

If you opt for the old regime, you can claim:

• ₹1.5 lakh under Section 80C

• ₹25K–₹50K under Section 80D

• Other deductions: 80TTA, 80E, 80G, etc.

🚫 Under the new regime, most of these deductions are not allowed, which may bring ITR income closer to salary.

📊 Example: Salary vs Taxable Income

Let’s assume:

• Gross Salary = ₹10,00,000

• HRA Exemption = ₹1,20,000

• Standard Deduction = ₹50,000

• 80C (LIC, PPF) = ₹1,50,000

• 80D (Health Insurance) = ₹25,000

Taxable Salary = ₹10,00,000 (Gross Salary) – ₹1,20,000 (HRA) – ₹50,000 (Standard Deduction) – ₹1,50,000 (80C) – ₹25,000 (80D) = ₹6,55,000

🧾 So your ITR will show ₹6.55L as income, not ₹10L.

⚖️ Old vs New Regime: Big Impact

Regime	Key Points
Old Regime	More deductions, lower taxable income
New Regime	Lower tax rates but fewer exemptions/deductions

📢 Many employees opt for the new regime without realizing it will increase their taxable income in ITR.

✅ Final Checklist

• 📝 Check Form 16 – It reconciles your salary with tax details

• 🔍 Compare Form 16 Part B with Payslip

• ✔️ Choose regime wisely based on deductions

• 📂 Keep proofs of exemptions claimed

❓ Still Confused by the Numbers?

Let us help you file correctly.

🔗 Upload PAN →
We’ll auto-calculate taxable salary & select the right regime for you.

📌 Conclusion

A mismatch between your salary slip and ITR income is completely normal. It’s due to:

• Tax exemptions (HRA, LTA)

• Deductions (80C, 80D)

• Standard deductions

What matters is whether your Form 16, salary slip, and ITR all match logically — and with your Form 26AS.