Salary tax slabs

A salary tax slab is one band of the income-tax slab schedule: an income range and the rate charged on the part of an employee's taxable income that falls inside it. You enter one record per band, for each regime and financial year, next to the other salary-tax rule tables. Every time xMatix projects an employee's salary tax, it adds up the tax of every band the income reaches. That slab tax is the starting point for the rebate, the surcharge and the cess, and so for the monthly TDS deduction in the payroll run and the annual salary rows of the TDS return.

Overview

Income tax on salary is progressive: each slice of income is taxed at its own rate, and the rate of a higher band never applies to the income below it. In xMatix each slice is a Salary Tax Slab record that holds:

• the Regime (Old or New) and the Financial Year,
• the income range (From Income to To Income) and the Rate,
• an Is Active switch and, optionally, the company it applies to (Partner Account),
• a unique Name for your own reference.

No slabs are supplied with the product. You type in the slabs from the current Finance Act for each regime and each financial year. A regime and year with no slabs computes a slab tax of zero, and therefore no TDS, without any warning.

When to use it

• Before the first payroll run of a financial year, together with that year's Tax Regime Rules and Tax Surcharge Slabs, for both regimes.
• When the Budget changes the slabs or rates of a regime.
• When an employee's projected tax looks wrong. The slabs are the first place to check for a missing year, a mistyped regime, a gap or an overlap.

How xMatix handles it

Slab tax is worked out wherever xMatix computes salary tax: the monthly TDS projection (run by Project TDS and by Calculate on a payroll run) and the employee rows of a Q4 salary TDS return. Each time, for each regime it computes, xMatix:

1. Works out the financial year from the payroll period's end date. Years start on 1 April, so a period ending 30 June 2026 belongs to 2026-27.
2. Collects the slabs. It takes every slab that is not deleted, whose Is Active is not unticked, and whose fields match or are blank:
   • Regime is the regime being computed, or blank (a blank regime applies to both);
   • Financial Year is the year being computed, or blank (a blank year applies to every year);
   • Partner Account is the payroll company, or blank (a blank company applies to every company);
   • the age band is General, or blank (see Business rules).
3. Works out the taxable income: the projected salary less the standard deduction and the allowed declaration claims, rounded to the Tax Regime Rule's Rounding Unit.
4. Adds up the tax band by band. For each slab, in order of From Income, it takes the part of the taxable income above From Income and no higher than To Income (a blank To Income means no upper limit) and charges the slab's Rate on it. The slab tax is the total of every band, rounded to two decimals.
5. Continues the computation with the rebate and its marginal relief from the Tax Regime Rule, the surcharge from the Tax Surcharge Slabs, and the cess.

Because the Monthly TDS Projection always computes both regimes to compare them, you need slabs for both the Old and the New regime of every year. A projection is written only when both regimes have a Tax Regime Rule for the year. Slabs do not have that safety net: a regime with a rule but no slabs is projected with zero slab tax.

Prerequisites

• A Tax Regime Rule for each regime and financial year. Without it nothing is projected, whatever slabs you enter.
• The slab schedule for the year from the Finance Act, for each regime.
• Your profile can open the Payroll Settings area and create Salary Tax Slab records (see Permissions).

Procedure

Step 1 — Open the slab list

Open the App Launcher, search for Payroll and select the app. Choose Settings, then under Salary Tax (TDS) choose Salary Tax Slabs. The All Salary Tax Slab view lists every slab with its Name, Partner Account, Regime, Financial Year, From Income, To Income, Rate and Created date. Sort or filter on Regime and Financial Year to see one schedule at a time.

Step 2 — Create one record per band

Select New. The form shows:

• Name — required and unique, for example NEW-2026-27-08L. There is no numbering series, so put the regime, year and starting income in the name.
• Partner Account — leave blank for a slab that applies to every company, or choose a company (read Business rules before you mix the two). On a tenant with only one company the field is hidden.
• Rate — the band's rate as a plain number: 5 for 5 percent. The box shows a currency sign; ignore it.
• Regime — a text box that starts as New. Type exactly New or Old. Any other text, such as Old Regime, saves without complaint but the slab is then never used.
• Financial Year — typed exactly as 2026-27. Do not leave it blank: a blank year makes the slab apply to every year.
• Is Active — tick it.

Under Income Details, enter From Income and To Income. Leave To Income blank on the top band.

Select Save. The slab opens on its record page. Repeat for every band of the regime, then for the other regime.

Step 3 — Make the bands meet exactly

Set each band's To Income to the next band's From Income, for example 0 to 4,00,000, then 4,00,000 to 8,00,000. Only income above From Income is charged in a band, so the shared boundary is counted once. Two things to avoid:

• A gap (one band ends at 4,00,000, the next starts at 4,50,000): the income in the gap is not taxed.
• An overlap (one band ends at 8,00,000, the next starts at 7,00,000): the income in the overlap is taxed in both bands.

A first band from 0 at a zero rate, for the exemption limit, is optional. Income below the lowest band is never taxed either way, but the zero-rate band makes the schedule easier to read.

Step 4 — Check the result on a projection

Run Project TDS (or Calculate) on an unposted payroll run of the year, then open the Monthly TDS Projection of an employee. Tax If Old Regime and Tax If New Regime now reflect the slabs. See Monthly TDS projections for reading the record.

Step 5 — Revise or retire a slab

• From Income, To Income and Is Active can be changed on the slab's record page: the Details card edits in place.
• Name, Partner Account, Rate, Regime and Financial Year are not on the record page. Change them from the list: use the row's Edit action, which opens the same form as New, and select Save.
• To retire a slab, untick Is Active. Retiring a middle band leaves the income in it untaxed; it does not move the other bands down, so change the neighbouring band's range as well.
• To remove a slab, delete it from the list (row action Delete, or select rows and use Delete in the selection bar).

A change affects only projections computed afterwards. Run Project TDS or Calculate again on any unposted run of the year. A posted run keeps the TDS it was calculated with, and the next month's projection spreads any difference over the remaining months of the year.

Step 6 — Set up the next financial year

Slabs with a Financial Year are matched to that year only. Before the first April run, create the new year's slabs for both regimes, even if the rates have not changed, together with the new year's Tax Regime Rules and Tax Surcharge Slabs. The standard screens have no copy action for slabs, so create each band as a new record. Names are unique, so give the new year's bands new names.

Fields

The record page header shows the Partner Account and Is Active. Its Details card shows From Income, To Income and Is Active. The slab also has an Age Band and a Label, which are on no standard form; new slabs are saved with the age band General.

Business rules

• No validation. xMatix does not check that From Income is below To Income, that the rate is sensible, that the regime text is Old or New, or that bands neither overlap nor leave gaps. The only check is that the Name is unique. Review the list after every change.
• Blank means "all". A blank Regime, Financial Year or Partner Account does not switch a slab off; it makes the slab apply to every regime, year or company. A blank-year band from last year keeps applying in every later year.
• Exact matching otherwise. A misspelt year or regime gives a slab that is never used, with no warning.
• Shared and company slabs are added together. For a company, the computation uses the shared slabs (blank Partner Account) and that company's own slabs together. A company slab does not replace a shared one: if the same bands exist both ways, the income is taxed twice. To give one company different slabs, give every company its own set and keep no shared slabs. Tax Regime Rules work differently: there a company rule does replace the shared one.
• A blank Partner Account may not stay blank. If the user who creates a slab has a default company in Company Access, a blank Partner Account is filled with that company when the slab is saved, and the slab then applies to that company only. Check the Partner Account column after saving. To create shared slabs, use an account that has no default company.
• Every employee is in the General age band. Employee records hold no date of birth, so the projection and the TDS return always compute the General band. Senior and super-senior slabs, which the Old regime has in law, cannot be selected on the standard form and would never be used if imported. Senior-citizen employees under the Old regime are taxed on the general slabs, so review their TDS by hand.
• Rounding. The taxable income is rounded to the Tax Regime Rule's Rounding Unit before the slabs are applied; the slab tax is kept to two decimals and the final tax is rounded again after cess.
• Where it is used. The slab tax feeds the Monthly TDS Projection (and through it the TDS deduction in the payroll run) and the employee rows of the Q4 salary TDS return.

Example

A payroll administrator prepares the New regime slabs for 2026-27, with figures taken from the Finance Act. They create seven shared slabs:

Each slab has Regime New, Financial Year 2026-27 and Is Active ticked.

An analyst on the New regime has a projected taxable income of 18,00,000 for the year. The slab tax is:

• 4,00,000 at 0 percent = 0
• 4,00,000 at 5 percent = 20,000
• 4,00,000 at 10 percent = 40,000
• 4,00,000 at 15 percent = 60,000
• 2,00,000 at 20 percent = 40,000

The slab tax is 1,60,000. The income is above the rebate ceiling and below the lowest surcharge threshold, so the Tax Regime Rule's cess is added to it and the result is rounded to give the annual tax.

The administrator then enters the Old regime slabs for the same year with Regime Old. A month later they notice the Old regime projections are too low: one Old regime slab was typed with Regime Old Regime, so it was never used. They correct it through the row's Edit action and run Calculate again on the unposted run.

Training

Practice exercise

In a sandbox with a Tax Regime Rule for both regimes of the current year:

1. Create New regime slabs for the current year as in the example.
2. Run Project TDS on an unposted payroll run of that year and open a test employee's Monthly TDS Projection. Note Tax If New Regime.
3. Create one more slab: Regime New, the current year, From Income 4,00,000, To Income 8,00,000, Rate 5.
4. Run Project TDS again.

Expected result: Tax If New Regime rises by 5 percent of the employee's income between 4,00,000 and 8,00,000 (up to 20,000), because the overlapping band is charged twice. Untick Is Active on the extra slab, run Project TDS again and the figure drops back.

Quick reference

• Path: Payroll → Settings → Salary Tax (TDS) → Salary Tax Slabs.
• One record per band, per regime (Old or New, typed exactly), per financial year (2026-27).
• Rate is a plain number (5 = 5 percent) on the slice of income in the band.
• Each band's To Income = the next band's From Income; blank To Income on the top band.
• Blank Regime, Year or Partner Account = applies to all of them.
• Shared and company slabs are added together, never one instead of the other.
• Regime, Year and Rate are changed through the list's row Edit, not on the record page.
• Re-run Project TDS or Calculate on unposted runs after a change.

Permissions

Access follows the Salary Tax Slab entity permissions in each security profile:

• See, create, edit and delete. These need read, create, edit and delete on Salary Tax Slab. The seeded System Admin, Standard User and Sales Executive profiles have full access, including the Delete actions.
• Reach the list. The slabs are in the Payroll Settings area. Of the seeded profiles, only System Admin has that settings app, so other users find the slabs only through the App Launcher search, if their profile can read the entity.

Because the slabs decide the tax deducted from every employee, restrict create, edit and delete to payroll administrators in your own profiles.

Configuration

Common problems

TDS is zero for everyone in a new year

The year has no slabs, or its slabs have a different Financial Year text. Check the list for slabs with the year written exactly as 2026-27 for both regimes, create them if needed and run Project TDS again.

One regime's tax is too low or zero

The slabs for that regime have a Regime other than exactly Old or New, for example Old Regime or New regime. Open each through the row's Edit, correct the text and save.

The tax is roughly double what it should be

The same bands exist twice: once shared (blank Partner Account) and once for the company, or the same year twice under two names. Both sets are added together. Keep one set, delete or deactivate the other, and run Project TDS again.

Part of the income is not taxed

There is a gap between two bands, or a middle band was deactivated. Make each band's To Income equal to the next band's From Income.

Last year's rate still applies

A slab with a blank Financial Year applies to every year. Give it the year it belongs to.

A slab I created as shared applies to one company only

Your user has a default company in Company Access, so the blank Partner Account was filled with it on save. Create shared slabs from an account without a default company, or create the slabs for each company.

Saving says the Name already exists

Slab names are unique across the tenant. Give the band a name that includes its regime and year, for example OLD-2026-27-05L.

A senior-citizen employee is taxed on the general slabs

Expected: employee records hold no date of birth, so every employee is computed in the General age band. Check those employees' TDS by hand.

Common questions

Do I need a zero-rate band for the exemption limit?

No. Income below the lowest band's From Income is never taxed, so a schedule that starts at 4,00,000 gives the same slab tax as one with a 0 to 4,00,000 band at 0 percent. The zero-rate band is still worth entering because it makes the schedule match the Finance Act and easier to review. Whatever you choose, keep the other bands meeting exactly, because a gap anywhere in the schedule leaves that income untaxed.

Can different companies have different slabs?

Yes, but only if no shared slabs exist for that regime and year. A company's computation always adds the shared slabs to its own, so a company slab cannot override a shared one, and having both charges the income twice. Give each company its own full set of slabs and leave no slab with a blank Partner Account. This differs from the Tax Regime Rule, where a company rule does replace the shared one.

Is the Rate the effective rate on total income?

No. It is the marginal rate for the slice of income between From Income and To Income. An employee with 18,00,000 of taxable income under the example New regime schedule pays 5, 10, 15 and 20 percent on successive slices, which comes to 1,60,000, not 20 percent of 18,00,000. Enter the rate exactly as the Finance Act states it for the band.

Does changing a slab change TDS already deducted?

No. Runs that are posted keep their TDS. The next projection uses the new slabs for the whole year's tax, and the difference between that and the TDS already deducted is spread over the remaining months. Re-run Project TDS or Calculate on any unposted run so it uses the new figures.

Related topics

• Income tax on salary
• Tax regime rules
• Monthly TDS projections
• Tax surcharge slabs
• TDS returns
• Payroll configuration
• Salary Tax Slab reference