The government has taken a significant step to provide significant relief to lower and middle -income sectors, proposing a fall of four percent in income tax across different plates.
Finance Minister Muhammad Aurangzeb, who presented the federal budget for the financial year 2025-26, stated 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’ home salary by relieving the tax burden.”
According to the new budget, individuals earning between RS0.6 million (RS50,000 monthly) and RS1.2 million a year (RS100,000 monthly) are to receive significant tax cut as the government has lowered their tax rate from five percent to one percent. For those who earn up to RS100,000 per Month, the federal budget also proposes a reduction in the total tax amount from RS30,000 to RS6,000.
Similarly, people who earn up to RS2.2 million a year will see a four percent decrease in the tax on their wages, bringing the rate down from 15 percent to 11 percent.
There is also some relief to the higher income fittings. Individuals earning up to RS3.2 million will benefit from a two percent cut, reducing their tax rate from 25 percent to 23 percent for the coming fiscal year.
Meanwhile, in a step to mitigate the brain drainage phenomenon, which sees professional human resources facing the highest tax burden in the region, the government has proposed a fall of 1 percent in the supplement used for individuals earning more than RS10 million a year.
Previously, it was revealed that the grade paid a staggering RS331 billion in income tax in the eight months of current fiscal policy, which is 1,350% more than the taxes paid by retailers, but still not enough for the government to seek relief from the International Monetary Fund (IMF) for the marginalized segment.
The total income tax contributions from the employees in July – the February period of this financial year were RS120 billion, or 56% higher than RS211 billion collected during the same period of the last financial year.
Last year, the grade RS368 billion paid in taxes. But despite this backbreaking burden for the employees who pay taxes on their gross income without adjusting the expenses, the government did not take the question of reducing this burden with the IMF during the newly held lectures.
