ISLAMABAD: Pakistan’s federal government on Tuesday proposed a 10 percent increase in salaries for government employees and a 7 percent rise in pensions, as part of the Federal Budget 2025–26, aimed at providing relief to the salaried class amid rising inflation and economic pressures.
Presenting the budget in the National Assembly, Finance Minister Muhammad Aurangzeb said the pay raise would apply to servants from grade 1 to 22 and was intended to ease the burden of rising living costs.
“This measure reflects our commitment to support government employees and pensioners in the face of economic challenges,” the Finance Minister added.
In addition to the salary and pension hikes, the government has also approved a 30 percent disparity reduction allowance for eligible employees.
A special relief allowance has been announced for officers and personnel of the armed forces, which will be met from within the allocated defence budget for FY 2025–26.
For employees with disabilities, the finance minister announced an increase in the special conveyance allowance from PKR 4,000 to PKR 6,000 per month, to facilitate mobility and access to services.
The budget also proposed major tax relief for the salaried class. Salaried individuals with annual incomes between PKR 600,000 and PKR 1.2 million will now be taxed at 5 percent, down from the previous 7.5 percent.
Those earning between PKR 1.2 million and PKR 2.2 million annually will face a revised tax rate of 15 percent, reduced from 17.5 percent, while income above PKR 2.2 million will be taxed at 35 percent.
The finance minister reiterated the government’s aim to gradually improve the purchasing power of citizens and ensure fair compensation for public sector workers.
