The government is considering a significant revision in the income tax structure for the salaried class in the upcoming federal budget for 2026–27, including a proposal to raise the highest tax slab threshold from Rs. 4.1 million to Rs. 7 million annually.
In addition, authorities are also planning to abolish the 10 percent surcharge currently imposed on top income earners, as part of a broader relief package aimed at easing the tax burden on upper-middle and high-income salaried individuals.
Sources familiar with the budget discussions told ProPakistani that the proposed adjustment is intended to address concerns over rising tax pressure on salaried individuals, many of whom have been pushed into higher tax brackets due to inflation-driven salary increases rather than real growth in purchasing power.
Under the proposed changes, the removal of the 10 percent surcharge is expected to reduce the effective tax liability for those in the highest income bracket.
However, sources indicated that tax slabs for individuals earning between Rs. 600,000 and Rs. 1.2 million annually are likely to remain unchanged, meaning lower and lower-middle income groups may not receive immediate relief in the upcoming budget.
The salaried class continues to remain one of the most heavily taxed segments of Pakistan’s formal economy, contributing a significant share of direct tax revenue, while other sectors such as agriculture, retail, and real estate remain comparatively less taxed.
Over the years, successive budgets have primarily expanded revenue collection by increasing rates and adjusting thresholds for salaried individuals rather than broadening the tax base across under-documented sectors.
The latest proposals indicate a partial shift in approach, although the relief appears to be concentrated primarily at the upper end of the salaried income structure.
