The federal government has proposed revised income tax slabs for salaried individuals in the Finance Bill 2026-27, lowering the tax burden for middle- and higher-income earners while keeping tax unchanged for several lower salary brackets.
According to the Finance Bill, the tax-free annual income threshold remains Rs. 600,000.
The tax rate on annual income between Rs. 600,000 and Rs. 1.2 million also remains 1 percent of the amount exceeding Rs. 600,000.
The main relief begins from annual income above Rs. 2.2 million. The tax rate for income between Rs. 2.2 million and Rs. 3.2 million has been reduced from 23 percent to 20 percent.
For income between Rs. 3.2 million and Rs. 4.1 million, the rate has been reduced from 30 percent to 25 percent.
The government has also introduced new intermediate slabs for higher-income salaried individuals. Under the proposed structure, annual income between Rs. 4.1 million and Rs. 5.6 million will be taxed at 29 percent, while income between Rs. 5.6 million and Rs. 7 million will be taxed at 32 percent.
The maximum tax rate of 35 percent will now apply only to annual income exceeding Rs7 million, compared to the earlier threshold of Rs. 4.1 million.
The Finance Bill also proposes removing the surcharge on salaried individuals earning more than Rs. 10 million annually. Under the existing structure, such taxpayers pay a 9 percent surcharge on their income tax liability.
The following table shows the estimated monthly tax under the proposed slabs and compares it with the existing structure. The calculations are based on annual taxable salary divided into monthly tax deductions.
| Monthly Salary | Monthly Tax Under Proposed Slabs | Monthly Tax Under Existing Slabs | Net Effect |
| Rs. 49,999 | Rs. 0 | Rs. 0 | No change |
| Rs. 60,000 | Rs. 100 | Rs. 100 | No change |
| Rs. 70,000 | Rs. 200 | Rs. 200 | No change |
| Rs. 80,000 | Rs. 300 | Rs. 300 | No change |
| Rs. 90,000 | Rs. 400 | Rs. 400 | No change |
| Rs. 100,000 | Rs. 500 | Rs. 500 | No change |
| Rs. 110,000 | Rs. 1,600 | Rs. 1,600 | No change |
| Rs. 120,000 | Rs. 2,700 | Rs. 2,700 | No change |
| Rs. 130,000 | Rs. 3,800 | Rs. 3,800 | No change |
| Rs. 140,000 | Rs. 4,900 | Rs. 4,900 | No change |
| Rs. 150,000 | Rs. 6,000 | Rs. 6,000 | No change |
| Rs. 175,000 | Rs. 8,750 | Rs. 8,750 | No change |
| Rs. 200,000 | Rs. 13,000 | Rs. 13,500 | Positive — Rs. 500 lower |
| Rs. 225,000 | Rs. 18,000 | Rs. 19,250 | Positive — Rs. 1,250 lower |
| Rs. 250,000 | Rs. 23,000 | Rs. 25,000 | Positive — Rs. 2,000 lower |
| Rs. 275,000 | Rs. 28,417 | Rs. 31,333 | Positive — Rs. 2,917 lower |
| Rs. 300,000 | Rs. 34,667 | Rs. 38,833 | Positive — Rs. 4,167 lower |
| Rs. 350,000 | Rs. 47,500 | Rs. 54,250 | Positive — Rs. 6,750 lower |
| Rs. 400,000 | Rs. 62,000 | Rs. 71,750 | Positive — Rs. 9,750 lower |
| Rs. 450,000 | Rs. 76,500 | Rs. 89,250 | Positive — Rs. 12,750 lower |
| Rs. 500,000 | Rs. 92,000 | Rs. 106,750 | Positive — Rs. 14,750 lower |
| Rs. 600,000 | Rs. 124,500 | Rs. 141,750 | Positive — Rs. 17,250 lower |
| Rs. 700,000 | Rs. 159,500 | Rs. 176,750 | Positive — Rs. 17,250 lower |
| Rs. 800,000 | Rs. 194,500 | Rs. 211,750 | Positive — Rs. 17,250 lower |
| Rs. 900,000 | Rs. 229,500 | Rs. 268,958 | Positive — Rs. 39,458 lower |
| Rs. 1,000,000 | Rs. 264,500 | Rs. 307,108 | Positive — Rs. 42,608 lower |
The calculations show that the monthly tax remains unchanged for salaries up to Rs. 175,000. Relief starts at Rs. 200,000 per month and becomes more visible as income rises.
The largest monthly savings in the table appear for salaries of Rs. 900,000 and Rs. 1 million. This is because these salaries exceed Rs. 10 million annually under the existing structure and are currently subject to the 9 percent surcharge, which the Finance Bill proposes to remove.
For a person earning Rs. 300,000 per month, the estimated monthly tax will fall from Rs. 38,833 to Rs. 34,667, giving a monthly saving of Rs. 4,167. For a person earning Rs. 500,000 per month, the tax will fall from Rs. 106,750 to Rs. 92,000, giving a monthly saving of Rs. 14,750.
The proposed changes are part of the government’s wider tax relief measures for salaried individuals in the new budget.
However, the final impact will depend on approval of the Finance Bill and the exact taxable salary after allowances, exemptions and other payroll adjustments.
Enter your monthly taxable salary to estimate tax under the proposed 2026-27 salary slabs.
| Monthly Salary | – |
|---|---|
| Annual Salary | – |
| Monthly Tax Under New Slabs | – |
| Monthly Tax Under Old Slabs | – |
| Monthly Impact | – |
| Annual Impact | – |
| Effective Tax Rate Under New Slabs | – |
Note: This calculator provides an estimate based on taxable salary only. Actual tax may vary due to allowances, exemptions, rebates, employer adjustments or final changes in the Finance Act.
function ppOldAnnualTax(income) { var tax = 0;
if (income 10000000) { tax = tax * 1.09; }
return tax; }
function ppNewAnnualTax(income) { var tax = 0;
if (income 0) { monthlyImpactBox.innerText = ppFormatRs(monthlyImpact) + " lower"; annualImpactBox.innerText = ppFormatRs(annualImpact) + " lower"; monthlyImpactBox.style.color = "#15803d"; annualImpactBox.style.color = "#15803d"; } else if (monthlyImpact 0 ? (newAnnualTax / annualSalary) * 100 : 0; document.getElementById("pp-effective-rate-result").innerText = effectiveRate.toFixed(2) + "%";
document.getElementById("pp-tax-output").style.display = "block"; }
document.addEventListener("DOMContentLoaded", function () { var salaryInput = document.getElementById("pp-salary-input");
if (salaryInput) { salaryInput.addEventListener("keydown", function (event) { if (event.key === "Enter") { ppCalculateSalaryTax(); } }); } });