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FY 2025-26 / AY 2026-27. These examples use the Income-tax Act, 1961 and assume a resident individual under 60 with ordinary slab-rate income only. Amounts called taxable income are after applicable deductions; do not subtract standard deduction again.
Surcharge is calculated on income tax. Its threshold depends on taxable income and, in mixed-income cases, the categories of that income. Check the complete liability before using a high-income salary estimate for a decision.
Warning
The site's salary-tax and regime-comparison calculators exclude surcharge. Their results cannot reproduce the final totals below. Neither adding those results to a separate capital-gains estimate nor entering CTC as taxable income establishes the complete liability.
Ordinary slab-rate income: which band applies?
| Total taxable income in this ordinary-income example | Old regime | New regime |
|---|---|---|
| Up to and including ₹50 lakh | 0% | 0% |
| Above ₹50 lakh, up to ₹1 crore | 10% | 10% |
| Above ₹1 crore, up to ₹2 crore | 15% | 15% |
| Above ₹2 crore, up to ₹5 crore | 25% | 25% |
| Above ₹5 crore | 37% | 25% |
The Income Tax Department's AY 2026-27 guide lists the rates and marginal-relief thresholds. There is no new surcharge step at ₹5 crore in the new regime. The ordinary-income rates diverge above ₹5 crore; different basic slabs can still make the two regimes' total taxes differ below that level.
Relief compares tax before cess
At a threshold where surcharge increases, calculate the tax plus surcharge at the threshold under the same applicable rules. Add the income exceeding that threshold. If the actual tax plus surcharge is higher than this limit, reduce it to the limit. At higher thresholds, the comparison includes surcharge already applicable at the threshold.
Then add 4% cess. The FY 2025-26 Budget memorandum, page 12 explicitly separates cess from marginal relief. Consequently, relief is not a guarantee that the final tax increase including cess is at most the additional income.
Worked example: ₹50.10 lakh taxable income
This is our independent calculation using the new-regime slabs above, with no special-rate income:
| Calculation | Amount |
|---|---|
| Base tax at ₹50,00,000: ₹3,00,000 + 30% × ₹26,00,000 | ₹10,80,000 |
| Base tax at ₹50,10,000 | ₹10,83,000 |
| Surcharge before relief: 10% × ₹10,83,000 | ₹1,08,300 |
| Tax plus surcharge before relief | ₹11,91,300 |
| Relief limit: ₹10,80,000 + ₹10,000 extra income | ₹10,90,000 |
| Marginal relief | ₹1,01,300 |
| Cess: 4% × ₹10,90,000 | ₹43,600 |
| Final tax including cess | ₹11,33,600 |
At exactly ₹50 lakh the final tax is ₹11,23,200. The extra ₹10,000 income therefore increases final tax by ₹10,400 in this example. That ₹400 difference is why the before-cess qualification matters. Relief stops binding once the ordinary tax-plus-surcharge amount falls below the comparison limit; it does not continue indefinitely above a band.
Worked example: ₹10 crore taxable income
Both columns assume the same ₹10 crore already-taxable ordinary income, with no capital gains, dividends, credits or other tax adjustments. This isolates the rates; it is not a comparison of identical gross salary with different deductions. Marginal relief does not bind here.
| Component | Old regime | New regime |
|---|---|---|
| Base income tax | ₹2,98,12,500 | ₹2,95,80,000 |
| Surcharge | ₹1,10,30,625 | ₹73,95,000 |
| Tax plus surcharge | ₹4,08,43,125 | ₹3,69,75,000 |
| 4% cess | ₹16,33,725 | ₹14,79,000 |
| Final tax | ₹4,24,76,850 | ₹3,84,54,000 |
Difference: ₹40,22,850. This calculation replaces the earlier incorrect base-tax figures. It does not establish that any individual's deductions are too small to matter or that a particular regime always wins.
Capital gains require category-specific treatment
The department identifies tax under Sections 111A, 112 and 112A and dividend income for the 15% surcharge cap, with specified exceptions. Do not apply this cap to every short-term gain. The Budget memorandum's individual surcharge provisions distinguish aggregate income at the ₹50 lakh/₹1 crore bands from the exclusions used for enhanced rates above ₹2 crore.
Those incomes can affect the applicable aggregate thresholds even though tax on the specified portion is capped. The cap does not remove them from every income computation. Mixed-income marginal relief needs a complete calculation; the ordinary-income table alone is insufficient.
What to do with an estimate
Gather the applicable year, income by tax category, eligible deductions, losses and any tax credits. Use the official return utility for that year or have the full calculation checked. Compare a taxable bonus or share-related receipt only after establishing its correct income category and timing; this guide does not recommend shifting payments or realising gains to avoid a band.
For an ordinary estimate excluding surcharge, the salary calculator and regime comparison show the basic comparison. Keep their stated limitation attached to any saved or shared result. For the lower-income rebate rule, see the separate Section 87A guide; rebate relief and surcharge relief are different calculations.
FAQ
The follow-up questions people usually ask after the main recommendation is already clear.
Does surcharge apply at exactly ₹50 lakh?
For the ordinary slab-rate case illustrated here, no. The first surcharge band applies when total taxable income exceeds ₹50 lakh, not when it merely equals it. Gross salary and CTC are not the same as taxable income.
Does marginal relief cover the additional cess?
No. Apply the relief comparison to income tax plus surcharge, then add 4% health and education cess. It is inaccurate to promise that the final tax increase including cess can never exceed the extra income.
Is every capital gain subject to a 15% surcharge cap?
No. The department identifies tax on income under Sections 111A, 112 and 112A and dividend income, with specified exceptions. A gain taxed at ordinary slab rates does not qualify merely because it is called a capital gain.
Can the salary calculator verify the final surcharge-inclusive total?
No. The salary and regime-comparison calculators exclude surcharge. Use an applicable official return utility or a calculation that models all income heads, surcharge and marginal relief together.