The Government of Pakistan is discussing providing tax relief to the salaried class in the upcoming Budget 2026-27 instead of increasing salaries and pensions.
According to local media reports citing sources in the finance ministry, discussions are underway to reduce income tax rates and possibly raise the taxable income threshold for salaried individuals in recognition of their major contribution to national tax revenues.
Pakistan’s salaried class has emerged as the country’s largest contributor to income tax collections, paying more than Rs425 billion during the first nine months of the current fiscal year.
Finance Minister Muhammad Aurangzeb has reportedly shown interest in easing the tax burden on salaried employees, especially when compared to sectors such as retail, wholesale, exports, and real estate, which contribute relatively less to direct taxes.
Reports said the government may keep salaries and pensions unchanged in order to save fiscal resources.
These savings could then be used to offer tax reductions for salaried workers. Officials believe that even a portion of the Rs170 billion spent last year on salary and pension increases could significantly lower personal income taxes.
