Govt proposes tax relief for salaried class

June 10, 2025 (MLN): The government has proposed to reduce the existing 5% tax slab, applicable on income between Rs600,000 and Rs1,200,000 per year, to 1%.

Additionally, the rates for the subsequent two slabs have been reduced from 15% to 11%, and from 25% to 23%, respectively. The surcharge has also been reduced from 10% to 9%, according to the Budget for FY2025–26 presented today.

Individuals earning a gross monthly salary of Rs100,000 will now be taxed at a rate of 1%, resulting in a net monthly salary of Rs99,900.

The effective tax increases progressively with income, reaching 28.2% for those earning Rs950,000 or above per month.

Under the new slab system, those with a gross monthly salary of Rs150,000 will be subject to a fixed tax of Rs6,000 annually, translating into a net monthly salary of Rs144,000.

At Rs200,000 monthly income, a 23% tax rate and Rs116,000 fixed tax bring the net monthly to Rs186,500. Salaries of Rs250,000 and Rs300,000 per month result in net monthly incomes of Rs225,000 and Rs261,167, respectively.

For higher income brackets, the impact intensifies. Individuals earning Rs400,000 per month will receive Rs328,250 after tax, with an effective tax rate of 17.9%.

Those earning Rs600,000 per month will take home Rs490,750 monthly, facing an effective tax rate of 23.6%.

At the top of the scale, individuals with a monthly salary of Rs1,000,000 will receive Rs718,250 after taxes.

Compared to the previous slab, monthly benefits range from Rs2,000 to Rs7,500, with the highest benefit percentage of 3.1% observed for those earning Rs200,000 and Rs250,000 per month.