ISLAMABAD – In the upcoming federal budget for the fiscal year 2025–26, the government is likely to raise the annual taxable income threshold from Rs. 600,000 to provide relief to salaried employees. Changes in tax slabs are also expected.
However, approval of these proposals is subject to the IMF’s consent. Meanwhile, a proposal to impose a tax of 5% to 20% on pensioners receiving high pensions is under consideration.
According to the FBR, only the lower tax slabs will be revised in the new budget, with no relief planned for high-income earners for now.
Officials say three proposals are being considered to support salaried individuals. One suggestion is to increase the tax exemption threshold from Rs. 600,000 to Rs. 800,000 annually, especially for those earning over Rs. 50,000 per month. The final decision will be made after further consultation.
The income tax return form will also be simplified, and tax slabs will be adjusted.
There’s also a possibility of relief for those earning between Rs. 600,000 and Rs. 1.2 million annually.
Proposed pension tax rates include:
5% tax on annual pension income up to Rs. 800,000
10% on income from Rs. 800,000 to Rs. 1.5 million
12.5% from Rs. 1.5 to 2 million
15% from Rs. 2 to 3 million
20% on income above Rs. 3 million annually
These are initial proposals and will be finalised after detailed review and consultation.
