Muhammad Aurangzeb is reportedly considering reducing income tax rates for salaried individuals in the upcoming Budget 2026-27 to provide relief to middle-income taxpayers.
According to reports, the government is reviewing proposals to lower tax rates and possibly increase the taxable income threshold for salaried employees.
Officials say the move is being considered because salaried individuals have become one of the largest contributors to tax collection in Pakistan compared to sectors like retail, real estate, and wholesale trade.
The government may avoid increasing salaries and pensions this year and instead use the available fiscal space to provide direct tax relief to employees.
Authorities believe salary increases often push workers into higher tax slabs, reducing the actual benefit in take-home salary after deductions.
An official familiar with the discussions said the aim is to ensure salaried employees remain financially better off through lower income tax rates even without salary hikes.
Reports suggest the Finance Ministry and tax policy experts are preparing multiple proposals that will be discussed with the International Monetary Fund during budget negotiations starting May 15.
The government is also reportedly considering cuts in development spending as part of broader fiscal adjustments under IMF discussions.
According to estimates, salaried individuals paid more than Rs. 425 billion in taxes during the first nine months of the current fiscal year, making them one of the highest taxed segments in Pakistan.
The contribution reportedly exceeded taxes collected from sectors including real estate, wholesalers, retailers, and exporters.
Officials also confirmed that previously approved salary increases for Public Sector Development Programme employees will remain protected from changes.
The latest budget discussions have gained strong attention online as users search for Budget 2026-27 Pakistan, salaried class tax relief, income tax reduction, and salary update Pakistan.