Islamabad:
In a much -needed relief for the tax -affected and inflationed government employees, the government stopped their wages by 10% along with a 4% reduction in the income tax rate across different plates in the federal budget revealed on Tuesday.
The government has taken a significant step to provide significant relief to lower and middle -income sectors, proposing a reduction in income tax of four percent in different plates. In addition, the government also proposed a 1% decrease in the supplement by earning over RS10 million a year.
Presentation of the federal budget for the financial year 2025-26 declared Finance Minister Muhammad Aurangzeb that the prime minister had consistently endeavored to lower the tax on the employees. “When we keep this goal in mind, we have proposed a decrease in income tax across all plates,” he said.
“This measure will not only facilitate the existing tax structure, but also create a crucial balance between inflation pressure and individuals’ homes by relieving the tax burden,” the minister announced while giving the budget in the National Assembly.
According to the budget proposal, individuals who earn between RS600,000 and RS1.2 million a year are to receive significant tax relief as the government lowers the tax rate from 5% to 1%. For those who earn up to RS100,000 per Month, the total tax amount drops from RS30,000 to RS6,000.
Similarly, individuals in the next plate, which earns up to RS2.2 million a year, will see a decrease of 4% from 15 to 11% in the income tax rate at their salaries. Individuals earning up to RS3.2 million will benefit from a 2% cut – from 25 to 23% – in the next financial year.
Meanwhile, in a step to reduce the brain drainage phenomenon that sees professional human resources facing the highest tax pressure in the region, the government has proposed a 1% decrease in the supplement used for individuals earning more than RS10 million a year.
The grade paid a staggering RS331 billion in income tax in the eight months of current fiscal policy – July – February – period – which is 1,350% more than the taxes paid by retailers. The amount was also RS120 billion, or 56% higher than RS211 billion collected in the same period of the last financial year.
At the same time, the Minister of Finance also proposed an increase of 10% in wages for the federal government employees and 7% improvement in retirements for retired federal employees. However, he said that pensioners with high income would be brought under the taxi.
Finance Minister Aurangzeb said that despite the financial restrictions, the government had decided to increase a 10% increase in the salary employee’s wages from class 1-22 in order to increase their purchasing power.
In addition, special transport allowance was increased for disabled employees from RS4,000 to RS6,000. In order to reduce differences among the employees of various departments, he announced the provision of a 30% difference between the reduction of differences for eligible employees.
This relief, the minister said, would not only simplify the tax structure, but also ensure a balance between inflation and home salary. “This step reflects the government’s obligation to make taxes more fair and reducing the burden of the employee individuals,” the finance minister said.
Similarly, the minister announced an increase of 7% in the retired employees’ pensions. He said a 5% tax had been proposed on income for retirees of up to 70 years, whose annual pension exceeded RS10 million. He said no tax would be imposed on pensioners with low and middle income.
He said the pension scheme had been changed through executive orders in the last few decades that burden the national treasury. To correct the situation, the government introduced reforms, such as deterring early retirement and connecting pension increase to the consumer price index (CPI).
The Minister of Finance also said that the family’s pension duration is limited to 10 years after the death of spouse and that several pensions had been abolished. When retiring after retirement, a person must choose between pension and salary.
