Budget 2025-26: Govt announces 10% salary, 7% pension hike, Tax relief for salaried class

ISLAMABAD: In a recent development, the federal cabinet has approved a 10% raise in the salary scales of government employees and a 7% raise in the pensions of retired public servants.

The Pakistan People’s Party (PPP), a key coalition partner of the Pakistan Muslim League Nawaz (PML-N) government, demanded a further increase in salaries, but the Federal Finance Minister Muhammad Aurangzeb said that the government was already providing the maximum possible relief to the common man in the budget.

The cabinet proposed a 10% increase in the salaries of government employees.

Prime Minister Shehbaz Sharif accepted the offer and negated the offer of a 6% increase, saying salaries should increase by 10%. The prime minister and his cabinet colleague ultimately approved the decision.

Tax Relief for Salary Class

According to the Budget 2025-26, the government has ensured to provide tax relief to the salaried class of Pakistan.

People earning an annual salary of Rs 1.2 lakh to Rs 2.2 lakh will pay a fixed tax of Rs 6,000 and an additional tax of 11 percent. People earning an annual salary of Rs 2.2 lakh to Rs 3.2 lakh will have to pay a fixed tax of Rs 1.16 lakh and an additional tax of 23 percent.

Additionally, People earning an annual salary of Rs 3.2 lakh to Rs 4.1 lakh will have to pay a fixed tax of Rs 3.46 lakh and an additional tax of 30 percent, the Finance Bill stated.

Moreover, People earning an annual salary of Rs 4.1 lakh and above will have to pay a fixed tax of Rs 6.16 lakh and an additional tax of 35 percent.