Islamabad, Pakistan: Prime Minister Shehbaz Sharif has directed officials to prepare proposals for salary tax relief for the federal budget 2026-27, including relief for annual incomes up to Rs3.6 million.
Sources said that the federal government was reviewing lower tax rates for people earning monthly salaries of Rs100,000, Rs200,000, and Rs300,000. A working plan also proposes changes for middle-income earners and a restructuring of income tax slabs.
The proposals include increasing the number of salaried income tax slabs from six to eight in the next fiscal year. Officials are also considering a new slab for individuals earning Rs 10 million or more annually.
Read: Pakistan Budget May Offer Tax Relief For Rs1.2m–Rs2.2m Earners
Three relief scenarios have been shared with the International Monetary Fund, including possible tax rate cuts of 3%, 5%, and 10% for different income groups.
Under the proposals, annual earners of Rs1.2 million, Rs2.2 million and Rs3.2 million could see tax rates reduced to 3%, 5% and 10%, respectively. Individuals earning Rs4.1 million or more annually may also face changes in the highest tax rate, which stands near 35%.
The government estimates that about 550,000 people fall in the Rs200,000 to Rs300,000 monthly salary bracket. More than 150,000 people earn Rs4.1 million or above annually.
The Federal Board of Revenue had submitted proposals for salaried-class tax relief to Prime Minister Shehbaz Sharif, with final approval expected after consultations with the IMF.
