Govt notifies 10pc salary increase for employees

ISLAMABAD: The federal government has notified a 10 percent salary increase for its employees as well as those working in the armed forces and civil armed forces, ARY News reported.

The federal government in budget 2025-26 had approved the increase in salaries for government employees, while pensions were raised by 10 percent.

The Ministry of Finance has issued an official notification as the decision will also apply to employees hired on contract.

Additionally, the Ministry of Finance released a notification for a 30 percent disparity allowance, which will benefit those employees who were previously not granted this allowance.

Both the salary hike and disparity allowance will take effect from July 1, 2025, as per the notification.

Earlier, the government has also issued the income tax slabs for salaried class as individuals earning up to Rs600,000 annually will be completely exempt from income tax in the budget 2025-26.

In the second slab, those earning between Rs600,001 and Rs1.2 million per annum will pay 1% income tax on the amount exceeding Rs600,000.

In the third slab, individuals with annual incomes between Rs1.2 million and Rs2.2 million will be subject to a fixed tax of Rs6,000 plus 11% tax on the amount exceeding Rs12 million.

Read More: Budget 2025–26: 10 per cent salary hike proposed for govt employees

For the fourth slab (Rs2.2 million to Rs3.2 million), a fixed tax of Rs116,000 will apply along with 23% tax on the amount above Rs2.2 million.

In the fifth slab, for annual incomes between Rs3.2 million and Rs4.1 million, the proposed tax includes a fixed amount of Rs346,000 and 30% tax on the amount exceeding Rs3.2 million.

The sixth slab covers individuals earning above Rs4.1 million annually, who will be required to pay a fixed tax of Rs616,000 plus 35% income tax on the amount exceeding Rs4.1 million.