Islamabad – Presenting the PKR 17.57 trillion federal budget for FY2025–26, Finance Minister Muhammad Aurangzeb introduced a series of relief measures aimed at the salaried class, pensioners, and government employees.
To help counter rising inflation, the government has proposed a 10% salary increase for federal employees and a 7% rise in pensions. Additionally, the Special Conveyance Allowance for individuals with disabilities will increase from PKR 4,000 to PKR 6,000 per month. A 30% Disparity Reduction Allowance has also been suggested for selected government employees.
In a tribute to the Armed Forces, a Special Relief Allowance has been proposed for officers, JCOs, and soldiers, which will be covered under the existing defence budget of PKR 2,550 billion.
Major Tax Relief for Salaried Individuals
Significant tax cuts have been introduced for the salaried middle-income group:
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Income between PKR 600,000 and PKR 1.2 million: tax reduced from 5% to 1%
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Income between PKR 1.2 million and PKR 2.2 million: tax lowered from 15% to 11%
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Income between PKR 2.2 million and PKR 3.2 million: tax reduced from 25% to 23%
To help curb brain drain, the surcharge on income above PKR 10 million has also been cut by 1%.
New Tax on High Pensions
In a controversial step, the budget imposes a 5% income tax on annual pensions exceeding PKR 10 million, targeting a small group of high-income retirees.
Social Welfare Gets a Boost
The Benazir Income Support Programme (BISP) will receive a 21% funding increase, reaching PKR 716 billion. Under the expanded Kafaalat programme, assistance will be extended to 10 million families.
These steps reflect the government’s effort to balance fiscal responsibility with targeted relief measures, aiming to support vulnerable communities while stimulating economic growth.
