ISLAMABAD (Kashmir English): The federal government has approved the upcoming budget for the fiscal year 2025-26, with several proposals, including a 6 per cent salary rise and a 7 per cent hike in pensions.
The finance bill was also greenlit during the meeting, with various measures aimed at providing relief to the salaried class, sources confirmed.
The federal government was evaluating three proposals to raise government employees’ salaries in the upcoming fiscal year’s budget, including whether salaries would increase by 6%, 10%, or 15%.
The International Monetary Fund (IMF) has reportedly raised concerns about keeping the current annual tax-free income threshold at Rs1.2 million.
This means the government is now thinking about introducing a minimum 1 per cent income tax for salaries at that level, and the tax-exempt limit might even be cut down to Rs600,000.
While a general income tax reduction of 2.5 per cent across all income brackets has been put forward, this decision isn’t final yet.
Additionally, the government might set the corporate income tax rate at 2.5 per cent. This move is aimed at widening the tax net and meeting the financial targets agreed upon with the IMF.
Today, Prime Minister Shehbaz Sharif will chair a federal cabinet meeting at 4 pm to approve these budget proposals before they are presented to the National Assembly.
Following this, Finance Minister Muhammad Aurangzeb will formally present the Federal Budget for the next fiscal year to the National Assembly.
Where he will also provide a copy of the “Finance Bill, 2025,” which contains the Annual Budget Statement, to the Senate.
