The federal government has proposed a 7% increase in the salaries of public sector employees in the federal budget for fiscal year 2026–27.
Presenting the Federal Budget in the National Assembly, Federal Minister for Finance Muhammad Aurangzeb stated that the Government of Prime Minister Shehbaz Sharif is fully aware of the challenges faced by salaried employees in both the public and private sectors.
The Finance Minister announced that, on the instructions of the Prime Minister, the Government has decided to provide tax relief to salaried individuals across four income slabs.
Under the proposed measures, salaried individuals earning between PKR 2.2 million and PKR 3.2 million annually will see their income tax rate reduced from 23% to 20%. For those earning between PKR 3.2 million and PKR 4.1 million per annum, the tax rate is proposed to be reduced from 30% to 25%.
The Finance Minister further stated in his budget speech that individuals with annual incomes ranging from PKR 4.1 million to PKR 5.6 million are proposed to benefit from a reduction in the income tax rate from 35% to 29%.
Similarly, for salaried employees earning between PKR 5.6 million and PKR 7.0 million annually, the tax rate is proposed to be reduced from 35% to 32%.
These measures are intended to provide meaningful relief to the salaried class and help ease the tax burden on middle- and higher-income earners.
