The federal government of Pakistan has proposed across-the-board reductions in income tax rates for salaried individuals in the Budget 2025-26.  Finance Minister Muhammad Aurangzeb announced a range of proposals for the salaried class during his budget speech at the National Assembly on Tuesday.  Individuals, earning between Rs600,000 and Rs1.2 million annually, will get the largest relief as the Pakistan government proposed a one percent tax rate from the earlier five percent. 

The proposal means that individuals earning Rs1.2 million will pay Rs6,000 in taxes, down from Rs30,000.  Additionally, the Pakistan government has proposed 11 percent income tax on taxpayers earning up to Rs2.2 million annually, a sharp four percent decline from the earlier 15 percent.  In his Budget 2025-26 speech, the Pakistan finance minister announced that similar reductions were planned for higher income brackets as well. 

According to Muhammad Aurangzeb, the proposals were aimed at keeping salaries in line with inflation, besides providing relief to Pakistan’s salaried class individuals.  “The government recognises that Pakistan’s top talent faces some of the highest taxes in the region. We want to give them a reason to stay,” the Pakistan minister said while presenting the federal budget.  It is worth noting here that Pakistan unveiled its federal budget for fiscal year 2025-26 on Tuesday. 

Credit: Independent News Pakistan (INP)