ISLAMABAD – Budget 2025-26 is around the corner and Pakistani government is planning reduction in income tax rates for the salaried class as part of new measures.
The proposal will be finalized after discussions with the International Monetary Fund (IMF), with the first round of negotiations having started on May 14 as global lender earlier resisted for passing on relief for masses.
Sources familiar with matter said Finance Minister shared several proposals aimed at providing tax relief to salaried individuals. The meeting also reviewed strategies to broaden the country’s tax base and increase overall revenue.
Sharif led government is looking to implement 2.5% tax relief across all income brackets. A similar reduction is also under consideration for the corporate sector to stimulate business activity.
If approved, individuals earning a monthly salary of Rs100,000 may see their tax rate cut from 5pc to 2.5pc, reducing their monthly tax payment to Rs2,500. For a monthly income of Rs183,000, the rate may drop from 15pc to 12.5pc. Salaries exceeding Rs3.3Lac may be taxed at around 32.5pc.
The federal budget for FY 2025–26 is expected to be presented in National Assembly on either June 2 or 3. Final decisions on tax policy will likely depend on the outcome of ongoing discussions with the IMF.
Expected new Capital Gains Tax rate on property sales in Budget 2025-26
