💰Disposable Income Calculator

Old vs. New Tax Regime Impact

India now offers two tax regimes. The New Regime offers lower rates but fewer deductions, while the Old Regime allows for significant savings via Section 80C (LIC, PPF, ELSS). Choosing the right one can increase your monthly disposable income by thousands of rupees. Our calculator compares both systems based on your specific investments, helping you maximize the 'cash in hand' every month as per the latest Ministry of Finance guidelines.

Income Tax Department of India

Mandatory EPF and Gratuity Deductions

For salaried employees, the Employee Provident Fund (EPF) deduction of 12% is a forced saving that reduces immediate disposable income but builds long-term wealth. When calculating your monthly budget, ensure you account for these 'unseen' deductions shown on your salary slip. The EPFO reports that millions of Indians rely on these funds for retirement, making them a vital part of your total compensation package.

Employees' Provident Fund Organisation (EPFO)

Cost of Living in Indian Metros

The Ministry of Statistics and Programme Implementation (MOSPI) tracks the Consumer Price Index (CPI), showing that inflation in food and housing significantly eats into the disposable income of urban Indians. While a salary of ₹15 lakh per annum is high in a Tier-2 city, it may result in lower 'discretionary' income in Mumbai due to high rents. Use this tool to plan your expenses against your actual net pay.

MOSPI – Government of India

How is 'Take-Home Salary' calculated in India?

Take-home salary = Gross Salary - (Income Tax + Professional Tax + EPF Contribution). Professional tax varies by state (e.g., ₹200 in Maharashtra). Some companies also deduct for group insurance or meals. This calculator provides a breakdown of these Indian-specific deductions so you know exactly why your bank credit is lower than your 'CTC' (Cost to Company).

Do government subsidies increase my disposable income?

Yes. Direct Benefit Transfers (DBT) for items like LPG (Ujjwala Yojana) or PM-Kisan payments for farmers directly increase the disposable income of millions of Indian households. While these may not appear on a corporate salary slip, they are vital income sources for many. Our tool helps you aggregate all income sources to see your total household spending power.

What is a healthy savings rate for Indians?

Historically, India has a high household savings rate (around 20-30% of disposable income). With the lack of a universal social security net, Indian financial experts emphasize saving for emergencies and children's education. After calculating your disposable income here, aim to invest at least 20% in diversified assets like Mutual Funds (SIPs) or Gold, as recommended by SEBI-registered advisors.

What is Disposable Income?

Disposable income is money left after essential expenses. It's what you can spend on wants, savings, or investments.

The 50/30/20 Rule

A popular budgeting guideline: 50% for needs (essentials), 30% for wants (discretionary), and 20% for savings and debt repayment.

Housing Ratio

Financial experts recommend keeping housing costs below 30% of your income to maintain a healthy budget.

Reduce Housing Costs

Consider renegotiating rent, looking for cheaper housing, getting roommates, or refinancing your mortgage. Housing is usually the biggest expense and biggest savings opportunity.

Eliminate High-Interest Debt

Credit card debt and personal loans eat into disposable income. Use the avalanche method (highest rates first) or snowball method (smallest balances first) to pay off debt.

Increase Your Income

Options include: asking for a raise, looking for a better job, side gigs or freelancing, monetizing hobbies, or creating passive income through investments.

Cut Unnecessary Expenses

Review subscriptions (streaming, gym, apps), negotiate bills (internet, phone, insurance), bring lunch to work, and compare prices before big purchases.

What percentage of my income should be disposable?

Ideally, 30-50% of your income should be disposable after essential expenses. If you are below 30%, your essential expenses may be too high.

What should I do with my disposable income?

Prioritize in order: emergency fund (3-6 months of expenses), debt payoff, retirement (at least 15% of income), then wants and entertainment.

How does housing ratio affect my disposable income?

Housing is normally 25-35% of income. If you are above 35%, there is little left for other needs and savings. Consider more affordable housing options.