ISLAMABAD – A major tax relief for the salaried class, as individuals earning up to Rs1 lac per month will now be taxed at just 1percent, a big drop from the previous 5percent.
Finance Minister Aurangzeb shared development in Senate session, as decision was made under direction of Prime Minister Shehbaz Sharif and is part of the government’s broader plan to ease the burden on low- and middle-income earners in the proposed federal budget for fiscal year 2025–26.
“The salaried segment bears the brunt of inflation and pays its taxes. This reduction is aimed at increasing their disposable income and rebuilding confidence in the tax system,” Minister said.
Budget proposal suggested reducing the tax rate for incomes between Rs600,000 and Rs1.2 million to 2.5%, but the latest revision cuts it further down to just 1%.
In addition to relief for lower-income groups, the government has introduced further tax reductions across other income brackets: Annual incomes up to Rs2.2 million will be taxed at 11%, down from 15%. Earnings between Rs2.2 million and Rs3.2 million will be taxed at 23%, down from 25%.
To counter the growing brain drain, the government has also proposed a 1% reduction in surcharge for individuals earning more than Rs1 million annually, hoping to retain skilled professionals in the country.
