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2026-09-25

PAYE for 2025/26 and 2026/27: the bands, the dependant deductions and the cumulative method

This post sets out what the published sources say, and links to each one. Every figure below was read from the source on 25 September 2026. If a source changes, the source wins.

The bands

Income year 1 July 2025 to 30 June 2026. First Rs 500,000 at 0%, the next Rs 500,000 at 10%, and the remainder at 20% (MRA PAYE circular, 6 October 2025).

Income year from 1 July 2026. The Finance Act 2026 replaces the First Schedule: first Rs 500,000 at 0%, next Rs 500,000 at 10%, next Rs 11 million at 20%, and the remainder at 35% (Finance Act 2026, s.7(v) and s.28(12)). At the time of writing, the MRA PAYE page still shows the three older bands.

In 2025/26 the Fair Share Contribution was withheld at 15% on emoluments above Rs 923,077 in July (the threshold is cumulative too). The Finance Act 2026 deletes the words that extended it to later income years (s.7(b)), so it does not continue into 2026/27.

The cumulative method

The MRA circular gives the bands month by month, on cumulative chargeable income: in July the first Rs 38,462 is at 0% and the next Rs 38,462 at 10%; by June the limits reach the annual Rs 500,000. Each month, PAYE is worked out on the year-to-date and the tax already withheld is deducted.

The prescribed end-of-year bonus is its own period in that table, between November and December. That makes 13 periods, and the MRA PAYE page says to “calculate 1/13 of the total reliefs” for each one (MRA PAYE page). PAYE is rounded down to the rupee.

Dependant deductions

For the income year ending 30 June 2027, the deduction for dependents is Rs 110,000 for one, Rs 190,000 for two, Rs 275,000 for three and Rs 355,000 for four or more (MRA reliefs and deductions). The employee declares them on the Employee Declaration Form (EDF). Employ treats a missing declaration as unknown, not as “no dependants”, and holds that person’s payroll until one is recorded.

What Employ does with this

Employ’s payroll takes these figures from the rate list, which records each figure’s source and the date it was read. A figure with no published source is kept “unconfirmed”, and payroll that depends on it stays a draft. The free salary calculator shows CSG, NSF and employer cost from planning rates, and does not show PAYE or net pay without an account.

This post is general information, not tax advice for your situation.