The salary bands where a raise leaves you poorer

What marginal relief is, and why it creates a cliff

Tax thresholds are cliffs by nature. Under the new regime the rebate wipes out the tax bill entirely up to a taxable income of ₹12,00,000. One rupee more and, on a plain reading, the whole bill arrives at once — you would earn ₹1 extra and lose tens of thousands.

Marginal relief is the fix for that. It says your tax may never exceed the amount by which you crossed the line. Cross by ₹1,000 and you pay ₹1,000 of tax, not the full slab bill. Cross by ₹10,000 and you pay ₹10,000. The relief is the difference, and it shrinks as your income rises — until, at a taxable income of ₹12,70,588, the slab bill has caught up with the excess and the relief is gone entirely.

Read that again as a rate. While the relief applies, every extra rupee of taxable income is taken as tax, and the 4% health and education cess is charged on top of it. Our engine measures the marginal rate across this band at 104%. Then the Code on Wages holds basic pay at half of your remuneration and EPF takes 12% of that basic, so another 6% of every extra rupee of gross goes into the provident fund rather than your bank account.

Put together: inside this band, every ₹100 added to your CTC reduces your annual take-home by ₹9.22. Not "increases it less" — reduces it.

The four bands where it happens (FY 2026-27)

Every figure below is computed by our calculator when this page is built, for the new regime, with basic held at the Code on Wages floor and employer PF and gratuity inside the quoted CTC. Your own numbers will sit a little differently if your basic is higher or your employer quotes CTC without the gratuity provision — but the shape, and the trap, are the same.

Worked for Karnataka, which charges ₹2,500 of professional tax a year at these incomes. The band edges do not depend on your state at all: under the new regime professional tax is not deductible, so it never touches taxable income.

What to do if your offer lands in one

There is no clever filing that gets this back. Marginal relief is already the concession; the band is what the concession costs on the way out of it. Three things do work.

• Negotiate past the band, not into it. Every band has a number at which you are simply level again — for the first one, that is ₹14,68,445 against a peak of ₹13,82,163. Asking for ₹86,282 more than the offer, rather than accepting a figure inside the band, is the whole fix.
• Take the difference as something that is not taxable salary. An employer NPS contribution under section 124 is deductible under the new regime; so is anything that is genuinely a reimbursement rather than pay. A raise routed there does not push taxable income further into the band.
• Check the number before you sign, not after. The band is narrow — the first is only ₹76,521 wide — so an offer usually clears it easily once someone knows it is there. Nobody is going to point it out for you.

Is this a mistake in the calculator?

No, and we checked. Our accuracy audit swept CTC through the engine in small steps, found these four bands, and solved the relief-exhaustion points by hand against the Income-tax Act 2025 to confirm the engine agreed — the rebate is section 156 of the 2025 Act ( the erstwhile section 87A), with marginal relief written into it, and surcharge marginal relief comes from the proviso to the annual rate schedule. Most calculators do not show this band because most calculators do not model marginal relief at all; they show a smooth line that is wrong at the edges.

Check your own figure

Put your CTC into the CTC to in-hand calculator, then put in the offer you are considering. If the monthly figure goes down, you have found one of these bands — and the table above tells you what to ask for instead.

Or watch it happen rather than take our word for it. Open the calculator on the CTC just before the first band, note the monthly figure, then open it on the offer ₹70,000 above that. Same instrument, same statute, one bigger salary — and a smaller number at the bottom. The full method, every dataset and every source behind these figures is on the methodology page.