ISLAMABAD: In the upcoming federal budget for the financial year 2025-26, the government is likely to increase the annual taxable income limit from Rs. 10,000 to Rs. 600,000 to provide relief to salaried employees. A change in tax slabs is also expected.
However, the approval of these proposals is subject to the consent of the IMF. Meanwhile, a proposal to levy tax from 5% to 20% on pensioners receiving higher pensions is under consideration.
According to the FBR, only the lower tax slabs will be revised in the new budget, there is currently no relief plan for higher income earners.
Officials say three proposals are being considered to help salaried individuals. One proposal is to increase the tax exemption limit from Rs. 600,000 to Rs. 800,000 per year, especially for those earning more than Rs. 50,000 per month. The final decision will be taken after further consultations.
The income tax return form will also be simplified, and tax slabs will be adjusted.
Relief is also likely for those earning between Rs. 600,000 and Rs. 1.2 million per annum.
Proposed pension tax rates include:
5% tax on annual pension income up to Rs. 800,000
10% on income from Rs. 800,000 to Rs. 1.5 million
12.5% from Rs. 1.5 to 2 million
15% from Rs. 2 to 3 million
20% on income above Rs. 3 million annually
These are initial proposals and will be finalised after detailed review and consultation.
