Pakistan govt offers tax relief, cuts rates for salaried class
ISLAMABAD: The government has announced substantial tax relief measure in the federal budget (2025-26) for salaried class taxpayers, and reduced tax rates across all income slabs for salaried individuals, aiming to provide much-needed financial respite amid economic challenges.
Tax rates for salaried individuals for income slab upto Rs.3,200,000 has been reduced to provide relief to lower and middle tiers income bracket. Similarly, surcharge rate is proposed to be reduced from 10% to 9% for salaried individuals only.
The Finance Bill (2025-26) introduced a revised tax structure for salaried individuals, significantly lowering tax rates and amounts across various income brackets.
Federal budget 2025-26: Cut in taxation rates for salaried people likely
Income between Rs600,000 and Rs1.2 million: The tax rate has been set at 1%, with the tax liability on an income of Rs1.2 million reduced from Rs30,000 to Rs6,000.
Income between Rs1.2 million and Rs2.2 million: The 15% tax rate imposed on annual income between Rs1.2 million and Rs2.2 million has been reduced by 4%. The new tax is set at 11%.
This means, an employee earning up to Rs 2.2 million, who used to pay a maximum of Rs330,000 annually in tax, will now pay Rs242,000.
Income between Rs2.2 million and Rs3.2 million: The tax rate has been lowered from 25% to 23%, providing relief to higher-earning salaried individuals.
An employee earning up to Rs2.2 million, whose maximum tax was previously Rs550,000 per year, will now have Rs506,000 deducted annually.
These reductions across all tax slabs reflect the government's commitment to supporting the salaried class, which has faced significant economic pressures due to inflation and rising living costs.
When contacted, tax lawyer Waheed Shahzad Butt informed that salaried individuals, earning between Rs600,000 and Rs1.2 million annually, will get the largest relief as the Pakistan government proposed a one percent tax rate from the earlier five percent.
The proposal means that individuals earning Rs1.2 million will pay Rs6,000 in taxes, down from Rs30,000.
Additionally, the Pakistan government has proposed 11 percent income tax on taxpayers earning up to Rs2.2 million annually, a sharp four percent decline from the earlier 15 percent.
Copyright Business Recorder, 2025
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