Government Announces Possible Income Tax Relief in Upcoming Budget

ISLAMABAD: The salaried class is likely to receive significant tax concessions in the Federal Budget 2026–27, as the government considers reducing the tax burden rather than increasing gross salaries. 

Authorities have proposed abolishing income tax and sales tax exemptions across various sectors.

No new tax exemptions will be introduced, including for special economic zones, while previously granted exemptions for these zones will also be withdrawn.

On the other hand, the government may keep salaries and pensions uncha­nged at current levels, using the resulting fiscal savings to provide tax relief instead. “There is no reason to increase salaries if it pushes employees into hig­her taxable income brackets, leaving government employees with little to no increase in take-home pay,” an official said.

The amount will rise by Rs5,000, taking it from Rs14,500 to Rs19,500, with officials planning to adjust payments based on available budget resources.