ISLAMABAD: Prime Minister Shehbaz Sharif has directed officials to prepare a major income tax relief package for the Salaried class in the upcoming federal budget 2026-27. The proposal aims to reduce financial pressure on middle-income earners across Pakistan.
According to sources, the initial plan includes tax relief for individuals earning monthly salaries of Rs100,000, Rs200,000, and Rs300,000. The government is reviewing options to lower tax rates across these income brackets.
The proposed framework also focuses on annual incomes up to Rs3.6 million. Officials are working on restructuring tax slabs to provide more balanced relief for the Salaried class.
Under consideration is an increase in the number of income tax slabs from six to eight. A new slab may also be introduced for high-income individuals earning Rs10 million or more annually.
Sources confirmed that a detailed briefing has already been presented to the Prime Minister. However, final approval will require consultation with the International Monetary Fund (IMF).
The government has shared multiple relief scenarios with the IMF. These include possible reductions of 3 percent, 5 percent, and 10 percent in tax rates for different income groups.
If approved, annual earners of Rs1.2 million, Rs2.2 million, and Rs3.2 million could see revised tax rates of 3, 5, and 10 percent respectively. This would directly benefit a large portion of the Salaried class in the country.
Officials also indicated that individuals earning Rs4.1 million or more annually may see adjustments in the highest tax rate. The current top rate stands at around 35 percent.
According to government estimates, nearly 550,000 individuals fall in the Rs200,000 to Rs300,000 monthly salary category. More than 150,000 people earn over Rs4.1 million annually.
The proposed reforms aim to create a fairer tax structure while supporting economic stability. Discussions are ongoing, and final decisions will be made after IMF approval.
In other news read more about Budget 2026-27: Govt to Impose Up to 25% Sales Tax on Imported EVs
Authorities said the relief package is part of broader efforts to ease financial burdens on the Salaried class while maintaining fiscal discipline in the upcoming budget.
