Finance Act 2026: section 4AB surcharge abolished for salaried individuals

Under the Finance Act 2026, the high-income surcharge under Section 4AB of the Income Tax Ordinance, 2001 – previously charged at 9% on tax liability for salaried individuals earning more than Rs. 10 million annually – has been abolished for Tax Year 2026-2027 (1 July 2026 to 30 June 2027).

This means salaried taxpayers falling in the highest income slabs will now pay tax strictly according to the revised slab rates, without any additional surcharge on top.

What this means for you

• If your annual salary exceeds Rs. 10 million, your effective tax liability will be lower compared to TY 2025-2026.
• Employers should update payroll withholding calculations accordingly for the new tax year.
• Our Tax Tools calculator on this website already reflects this change under the '2026-2027' tax year option.

If you would like a personalized calculation or year-over-year comparison, feel free to reach out to our team.