The federal government has proposed major income tax relief for businesses in the budget for 2026-27, including the removal of lower business income tax slabs and a reduction in super tax for high-income businesses.
According to the budget speech, the government has decided to abolish the existing business income tax slabs for annual income between Rs. 5 million and Rs. 50 million. These slabs earlier carried tax rates ranging from 1% to 7%.
The government said the measure is aimed at encouraging small businesses and industries, while making it easier for them to expand operations.
For businesses earning more than Rs. 50 million, the government has also proposed reducing the super tax rate from 10% to 8%. However, the existing surcharge on banking companies, textile companies and fertilizer companies will remain in place.
Officials said the measure is part of the government’s wider tax rationalisation agenda, which seeks to reduce the burden on productive sectors while keeping revenue collection on track.
The move is expected to be welcomed by business groups, especially small and medium enterprises, which have long argued that multiple tax slabs and high surcharge rates discourage formal expansion.
