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Income tax may fall for some salaried segments
🇵🇰 Pakistan /Economy & Trade

Income tax may fall for some salaried segments

From Dawn · () English

Summarized and contextualized by DistantNews.

At a glance

News Named sources New plan
  • The upcoming budget in Pakistan may offer tax relief for salaried individuals earning between Rs230,000 and Rs341,000 monthly.
  • New tax measures totaling Rs660-700 billion are planned to meet an ambitious Rs15.3 trillion revenue target for FY2026-27, aligned with IMF commitments.
  • Those earning Rs100,000-Rs183,000 monthly are unlikely to see tax changes, while the maximum tax rate could decrease from 35% to 30%.

Pakistan's upcoming budget is poised to introduce significant tax relief for a segment of salaried individuals, specifically those earning between Rs230,000 and Rs341,000 per month. Official sources indicate that this group is likely to experience a reduction in their tax burden. However, individuals earning between Rs100,000 and Rs183,000 monthly, which constitutes a large portion of the salaried workforce, may not see any changes to their current tax liabilities.

Those earning between Rs230,000-Rs341,000 per month likely to get some relief; maximum tax rate expected to be lowered from 35pc to 30pc

— Official sourcesIndicating potential tax relief for specific income brackets.

The government, led by Shehbaz Sharif, is navigating a constrained fiscal environment by planning fresh tax measures estimated between Rs660 billion and Rs700 billion for the 2026-27 fiscal year. These measures are crucial for achieving an ambitious Federal Board of Revenue (FBR) revenue collection target of Rs15.3 trillion, a goal that aligns with Pakistan's commitments under an International Monetary Fund (IMF) program. The proposed revenue increase represents a significant jump from the previous fiscal year's collection.

Rs660bn to Rs700bn in fresh tax measures planned, including enforcement and new levies

— Official sourcesDetailing the scale of new tax measures planned for the budget.

While the broader revenue-raising efforts are underway, the budget includes targeted benefits for mid- and upper-level income earners. A notable consideration is the potential reduction of the maximum salary tax rate from the current 35% to approximately 30%. This adjustment, alongside other relief measures for higher earners, contrasts with the anticipated lack of changes for lower and middle-income salaried individuals.

Govt targets Rs15.3tr FBR revenue in FY2026-27

— Official sourcesStating the ambitious revenue collection target for the Federal Board of Revenue.

Officials involved in budget preparations expressed concerns that the Rs15.3 trillion revenue target is overly ambitious and potentially unrealistic. However, they acknowledged that the government has little choice but to adhere to the IMF program's requirements. Meeting these collection goals is expected to present substantial challenges for the FBR, requiring a combination of new levies and enhanced enforcement strategies. The government aims to secure Rs260 billion from new tax measures and Rs400 billion through enforcement initiatives.

Individuals earning between Rs230,000 and Rs300,000 a month are expected to see a steep reduction in their tax burden

— Official sourcesSpecifying the income range expected to benefit from significant tax reduction.
DistantNews Editorial

Originally published by Dawn. Summarized and contextualized by our editorial team with added local perspective. Read our editorial standards.

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