By Moaaz Manzoor

The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has proposed significant tax relief measures for salaried individuals in the federal budget FY2026-27, including doubling the non-taxable income threshold to Rs1.2 million and reducing tax rates on salaried income.

According to the FPCCI budget proposals document available with Wealth Pakistan, the business body stated that rising living expenses and increasing financial pressures have reduced disposable income available to households, affecting spending capacity and overall economic activity.

The chamber proposed increasing the existing non-taxable income threshold from Rs600,000 to Rs1.2 million annually.

According to the document, the current tax structure does not adequately account for the rising cost of living and the financial needs of households.

FPCCI stated that salaried individuals currently face income tax rates reaching up to 35%, in addition to a 9% surcharge.

The organization maintained that after deductions, many households are left with limited disposable income to meet essential expenditures, including education, healthcare, housing, and other household requirements.

To address these concerns, FPCCI proposed reducing the maximum tax rate for salaried individuals from 35% to 30%.

The chamber also recommended reducing or abolishing the existing 9% surcharge applied on salaried taxpayers.

According to the proposals, easing the tax burden can improve household purchasing power and provide greater financial flexibility to taxpayers.

The organization further proposed introducing tax credits for expenditure on education and healthcare.

FPCCI stated that such measures could encourage spending on quality education and healthcare while promoting documentation and tax compliance.

According to the document, providing tax credits linked to documented expenditures can also support the broader objective of expanding the formal economy and encouraging greater participation in the tax system.

The chamber noted that tax policies should consider changing economic conditions and the financial realities faced by households.

It stated that higher inflation in recent years and rising prices across different sectors have increased the cost of essential services and reduced purchasing capacity for many families.

FPCCI maintained that creating a balanced taxation framework can support both revenue collection objectives and economic activity.

The organization emphasized that stronger household purchasing power can contribute to consumption growth, which remains an important component of economic activity.

According to the proposals, tax measures aimed at increasing disposable income can support broader economic stability while reducing pressure on salaried taxpayers.

Credit: INP-WealthPk