ISLAMABAD – Federal Board of Revenue (FBR) has drafted key proposals aimed at providing much-needed tax relief to the salaried class in the upcoming federal budget for the fiscal year 2025-26. However, the approval of these measures hinges on the green light from the International Monetary Fund (IMF).
As per available information, the government is considering to raise annual taxable income threshold from the current Rs. 600,000 to Rs. 800,000. This change, if approved, will offer financial relief to employees earning over Rs. 50,000 per month, a demographic struggling under growing inflationary pressures.
Officials reveal that three primary proposals are under review: Raising the annual taxable income limit from Rs. 600,000 to Rs. 800,000. Restructuring income tax slabs, especially those affecting low-to-middle income earners. Simplifying the income tax return process to improve compliance and ease.
Relief is also being considered for individuals in the income bracket of Rs. 600,000 to Rs. 1.2 million annually. However, there are no current plans to provide relief for high-income salaried individuals. FBR sources emphasize that only the lower income tax slabs are likely to be adjusted, in line with efforts to support low and middle-income households. Final decisions will be made following detailed consultations and subject to IMF’s approval.
In a parallel development, the government is reviewing proposals to impose taxes on high-value pensions. The suggested structure includes:
| Annual Pension Income | Proposed Tax Rate |
|---|---|
| Up to 800,000 | 5% |
| 800,001 to 1,500,000 | 10% |
| 1,500,001 to 2,000,000 | 12.5% |
| 2,000,001 to 3,000,000 | 15% |
| Above 3,000,000 | 20% |
These proposals are currently in the early stages and will undergo detailed scrutiny before being finalized in the budget announcement expected in June 2025.
If implemented, these reforms could bring significant relief to Pakistan’s salaried class, long burdened by high taxes and rising living costs.
