10% tax cut on salaried class is proposed by the government to lower the financial burden and is currently under consideration as the government has presented key elements of its 2025-26 budget in taxation measures to the IMF (International Monetary Fund).
The proposed tax relief could result in lowering the burden for salaried class individuals by more than PKR 50 billion and is part of huge discussions with the IMF (International Monetary Fund). The meeting is scheduled between 14 May and 22 May 2025. These meetings will discuss finalizing the budget and addressing any financial gap from proposed tax relief. Sources also suggest that the government is willing to take additional taxation measures to neutralize any revenue shortfall caused by these relief measures.
Moreover, in the first 10 months of the current fiscal year (2024-25), the salaried class has contributed over PKR 450 billion in taxes, exceeding other sectors like export and retail. This is an increase from PKR 368 billion paid during the previous fiscal year (2023-24). Initially an increase in tax rates was predicted to raise an additional PKR 100 but collections have gotten beyond predictions. Estimates now indicate that the salaried class will contribute between PKR 225 and 250 billion more, carrying a total tax contribution of PKR 550 billion by the end of June 2025 from this group.
Additionally, tax payments have increased, especially among middle-class earners. High-income earners, especially those earning over PKR 1 million per month, are facing 10% surcharges on top of their existing 40% tax rate. Critics argue that these rates disproportionately affect high-income earners, causing discontent. Right now, FBR (Federal Board of Revenue) is still reviewing the proposals and discussing tax rates for the salaried class.
