Good news for salaried class in upcoming budget

ISLAMABAD: The salaried class is likely to receive significant tax concessions in the Federal Budget 2026–27, as the government considers reducing the tax burden rather than increasing gross salaries, ARY News reported.

The government is currently deliberating various proposals aimed at slashing income tax rates for salaried individuals for the upcoming fiscal year.

Federal Minister for Finance Muhammad Aurangzeb is reportedly in favor of lowering tax rates and increasing the basic tax exemption limit on the salaried class.

According to sources, the government intends to reallocate financial resources toward tax relief by opting not to increase government employees’ salaries and pensions.

Officials believe that salary hikes often push employees into higher tax slabs, neutralizing the impact of the raise.

Therefore, direct tax relief is seen as a more effective way to increase take-home pay.

In the first nine months of the current financial year, the salaried class contributed a staggering Rs 425 billion in taxes—a figure that surpasses the total tax collected from the real estate, wholesale, and retail sectors combined.

While the 20% to 30% salary increase previously approved for public sector development program employees remains in place for July 1, further cuts to federal development funds are expected to facilitate this broader tax relief.

However, a final decision on these proposals will only be taken after consultations with the International Monetary Fund (IMF), scheduled to begin on May 15.

It is pertinent to mention here that the government has announced the cut off federal development fund owing to the fuel crises erupted after the Iran War.