Govt to provide relief to salaried class in upcoming budget

As Pakistan prepares to unveil its federal budget for the 2025-26 fiscal year, early details suggest the government is considering tax relief measures aimed at easing the burden on salaried class.

Sources indicate that the government is considering raising the annual taxable income threshold from the current Rs600,000 to Rs800,000.

Alongside this adjustment, changes to the existing income tax slabs are also expected as part of a broader effort to ease the financial burden on salaried employees. However, these relief measures are likely to be subject to the approval of the International Monetary Fund (IMF), with whom the government is currently engaged in negotiations.

According to the Federal Board of Revenue (FBR), only the lower tax slabs are expected to be revised, with no immediate plans to extend relief to higher-income earners.

Officials have disclosed that three proposals are currently under discussion, one of which includes increasing the income threshold for the first tax slab, potentially affecting individuals earning more than Rs50,000 per month. Additionally, there are plans to simplify the income tax return process to make it more user-friendly and transparent.

There is also a strong possibility that individuals earning between Rs600,000 and Rs1.2 million annually will receive some form of tax relief in the new budget.

In parallel, the government is reviewing a new taxation framework for pensioners receiving higher incomes. As per the proposals under consideration, pension incomes up to Rs800,000 annually may be taxed at 5 percent. Those earning between Rs800,001 and Rs1.5 million could face a 10 percent tax, while incomes ranging from Rs1.5 million to Rs2 million may be taxed at 12.5 percent. Pensioners earning between Rs2 million and Rs3 million annually might be subject to a 15 percent tax, and those receiving more than Rs3 million could see their income taxed at 20 percent.

Officials have emphasized that these proposals are still in the early stages and will undergo a detailed review and consultation process before any final decisions are made.

The federal budget for 2025-26 is expected to be presented later this year, with further details likely to emerge as discussions with stakeholders and the IMF continue.