Existing vs Proposed Incremental Tax Rates
Print / PDF ready – accurate as per Budget 2026-27
| # | Taxable income slab | Existing Rate | Proposed Rate |
|---|---|---|---|
| 1 | Upto Rs 600,000 | - | - |
| 2 | Exceeding Rs 600,000 upto Rs 1,200,000 | 1% of amount exceeding Rs 600,000 | 1% of amount exceeding Rs 600,000 |
| 3 | Exceeding Rs 1,200,000 upto Rs 2,200,000 | 11% of amount exceeding Rs 1,200,000 | 11% of amount exceeding Rs 1,200,000 |
| 4 | Exceeding Rs 2,200,000 upto Rs 3,200,000 | 23% of amount exceeding Rs 2,200,000 | 20% of amount exceeding Rs 2,200,000 |
| 5 | Exceeding Rs 3,200,000 upto Rs 4,100,000 | 30% of amount exceeding Rs 3,200,000 | 25% of amount exceeding Rs 3,200,000 |
| 6 | Exceeding Rs 4,100,000 upto Rs 5,600,000 | 35% of amount exceeding Rs 4,100,000 | 29% of amount exceeding Rs 4,100,000 |
| 7 | Exceeding Rs 5,600,000 upto Rs 7,000,000 | 35% of amount exceeding Rs 5,600,000 | 32% of amount exceeding Rs 5,600,000 |
| 8 | Exceeding Rs 7,000,000 | 35% of amount exceeding Rs 7,000,000 | 35% of amount exceeding Rs 7,000,000 |
Budget Commentary
Analysis of proposed tax relief for salaried class
✔ Slab 4 (Rs 2.2M–3.2M): Rate reduced from 23% → 20% (3% relief).
✔ Slab 5 (Rs 3.2M–4.1M): Reduced from 30% → 25% (5% reduction).
✔ Slab 6 (Rs 4.1M–5.6M): Major cut from 35% → 29% (6% decrease).
✔ Slab 7 (Rs 5.6M–7M): Reduced from 35% → 32% (3% benefit).
✔ Highest earners (>7M) retain 35% rate, but surcharge under section 4AB abolished for income exceeding Rs 10M from tax year 2027.
A surcharge under section 4AB of the Ordinance which is otherwise applicable at the rate of 9% of tax payable by salaried individuals having taxable income exceeding Rs 10 million is proposed to be abolished from tax year 2027.