Major relief expected for govt employees in Budget 2026-27

ISLAMABAD: The Ministry of Finance is reportedly preparing a range of proposals related to salary and pension adjustments for government employees in the upcoming fiscal year 2026-27 budget, ARY News reported, citing sources.

According to sources, the proposals include tax relief for salaried individuals earning between Rs 1.2 million and Rs 2.2 million annually, aimed at providing relief to the middle-income group.

Officials are also considering revisions in conveyance allowance due to rising petroleum costs, with a proposal to double the allowance for employees in Grades 1 to 19. For officers in Grades 20 to 22, an increase of 50 to 75 percent is also under review.

Among other proposals, a 10 percent salary increase for government employees is being considered, along with the merger of one ad-hoc relief allowance out of four provided between 2022 and 2025.

Sources further stated that a disparity allowance for employees in Grades 1 to 16 is also being proposed in the new budget.

For pensioners, an increase of up to 80 percent is being considered, linked to the average inflation rate over the past two years.

Additionally, discussions are underway regarding the inclusion of armed forces personnel in a contributory pension scheme from the next fiscal year.

Officials said that all proposals will be presented to the Prime Minister and the federal cabinet for review. A final decision is expected in the cabinet meeting scheduled before the budget session on June 5, sources added.