ISLAMABAD (Kashmir English): The government has proposed a big relief for the salaried class and also proposed an increase in the salaries and pensions of public sector employees in the federal budget 2026-27.
Finance Minister Muhammad Aurangzeb is currently presenting the federal budget 2026-27, worth over Rs18 trillion, in the National Assembly amid the ruckus by the opposition.
As per details, the government has proposed a 7% increase in the salaries of public sector employees and 7% increase in pensions for retired government employees.
In addition, the federal government has suggested a 10% increase in the minimum wage.
Tax relief for salaried class
Under the relief package, individuals earning up to Rs50,000 per month have been granted a full tax exemption. The annual income tax for those earning Rs100,000 per month has been reduced from Rs2,500 to Rs500.
Further reductions have also been proposed across various salary levels.
For example, the monthly income of Rs150,000 will now be taxed at Rs6,000 instead of Rs10,000, while the Rs200,000 income will be taxed at Rs13,500 instead of Rs19,167.
For higher brackets, tax on a Rs225,000 monthly income has been cut to Rs19,250 from Rs25,417, while a Rs250,000 income will now be taxed at Rs25,000 instead of Rs31,667.
Similarly, tax on a Rs300,000 monthly income has been reduced to Rs38,833 from Rs45,833, and for Rs350,000 it has been brought down to Rs54,250 from Rs61,250.
At higher levels, a Rs500,000 monthly income will now be taxed at Rs106,750 instead of Rs113,750, while a Rs800,000 income will be taxed at Rs211,000 instead of Rs218,000. For Rs1 million monthly salary, the tax has been reduced from Rs317,000 to Rs307,000.
The government has also decided to abolish the surcharge imposed on the salaried class.
