The federal government has announced a new income tax relief proposal for salaried individuals in Pakistan, introducing revised tax slabs and additional benefits in the FY2026–27 budget aimed at reducing financial pressure on middle-income earners.
Finance Minister Senator Muhammad Aurangzeb presented the budget in the National Assembly, stating that the government is aware of the rising cost of living and aims to provide meaningful relief to both public and private sector employees.
Revised Income Tax Slabs Proposed
Under the proposed Finance Bill, income tax rates for salaried individuals will be restructured into four revised slabs with reduced marginal rates.
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For those earning Rs2.2 million to Rs3.2 million annually, the tax rate is proposed to be reduced from 23% to 20%, with tax calculated as Rs116,000 plus 20% of income exceeding Rs2.2 million.
For salaries between Rs3.2 million and Rs4.1 million, the rate will drop from 30% to 25%, with a base tax of Rs316,000 plus 25% of the amount above Rs3.2 million.
For income between Rs4.1 million and Rs5.6 million, the rate is proposed to decrease from 35% to 29%, with Rs541,000 plus 29% of income above Rs4.1 million.
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For the highest slab, Rs5.6 million to Rs7 million, the tax rate is proposed to fall from 35% to 32%, with Rs976,000 plus 32% of income exceeding Rs5.6 million.
Surcharge on Salaried Class to Be Abolished
A key relief measure in the proposal is the complete abolition of the surcharge on salaried individuals, which had previously been reduced from 10% to 9% in the last fiscal year.
The government described this move as part of its broader effort to ease the tax burden on working professionals and address long-standing demands from the salaried class.
Salary, Pension and Minimum Wage Increases
In addition to tax reforms, Finance Minister Aurangzeb announced a 7% increase in salaries for government employees, citing inflationary pressures.
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Retired employees will also see a 7% increase in pensions, while the minimum monthly wage has been proposed to rise by 10%.
Government’s Relief Strategy
The Finance Minister said the proposals reflect the government’s commitment to supporting salaried individuals who have been significantly affected by inflation and rising living costs.
He emphasized that the budget measures aim to strike a balance between fiscal responsibility and public relief, while improving purchasing power for middle-income households.
