Government proposes lower tax rates in four income slabs and plans to remove surcharge on salaried individuals.
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Finance Minister Muhammad Aurangzeb announced income tax relief for salaried individuals while presenting the Federal Budget 2026-27 in the National Assembly.
He said the government recognizes the financial challenges faced by salaried employees in both the public and private sectors. On the instructions of Prime Minister Shehbaz Sharif, several tax relief measures have been proposed.
For annual incomes between Rs2.2 million and Rs3.2 million, the marginal tax rate is proposed to be reduced from 23% to 20%. Tax payable will be Rs116,000 plus 20% of the amount exceeding Rs2.2 million.
For incomes between Rs3.2 million and Rs4.1 million, the rate is proposed to fall from 30% to 25%. Tax payable will be Rs316,000 plus 25% of the amount exceeding Rs3.2 million.
For annual earnings between Rs4.1 million and Rs5.6 million, the tax rate is proposed to decrease from 35% to 29%. Tax payable will be Rs541,000 plus 29% of the amount exceeding Rs4.1 million.
For those earning between Rs5.6 million and Rs7 million, the rate is proposed to be reduced from 35% to 32%. Tax payable will be Rs976,000 plus 32% of the amount exceeding Rs5.6 million.
The government has also proposed abolishing the surcharge on the salaried class, aiming to increase disposable income and provide further financial relief.
