The Finance Act 2026, in force from 1 July 2026, cut income tax for salaried individuals on every slab above Rs 2.2 million a year. If more than 75% of your taxable income is salary, these are the rates for tax year 2027.
The new salaried slabs
| Annual taxable income | Tax |
|---|---|
| Up to Rs 600,000 | 0% |
| Rs 600,001 – 1.2m | 1% above 600,000 |
| Rs 1.2m – 2.2m | Rs 6,000 + 11% |
| Rs 2.2m – 3.2m | Rs 116,000 + 20% (was 23%) |
| Rs 3.2m – 4.1m | Rs 316,000 + 25% (was 30%) |
| Rs 4.1m – 5.6m | Rs 541,000 + 29% (was 35%) |
| Rs 5.6m – 7m | Rs 976,000 + 32% (was 35%) |
| Above Rs 7m | Rs 1,424,000 + 35% |
The surcharge is gone for salaried income
Last year, salaried people earning over Rs 10 million paid an extra 9% surcharge on their tax. That no longer applies to income taxed under the salaried slabs.
What it means in rupees
- Rs 266,667 a month (Rs 3.2m a year): Rs 30,000 less tax a year.
- Rs 341,667 a month (Rs 4.1m a year): Rs 75,000 less.
- Rs 583,333 a month (Rs 7m a year): Rs 207,000 less.
- Rs 1,000,000 a month: over Rs 511,000 less, including the removed surcharge.
What to do
Check that your employer has updated its payroll from July. If your deduction has not dropped, the extra tax can be adjusted in later months or claimed back through your return.
Use our salary calculator, or send us your payslip and we will check it.
General information based on the Finance Act 2026, not advice for your situation. Talk to us about your case