Islamabad, June 12, 2026: The federal government on Friday proposed a 7 percent increase in the salaries of public sector employees and a 7 percent raise in pensions for retired government servants as part of the Budget 2026-27 unveiled in the National Assembly.
The Pakistan Muslim League-Nawaz (PML-N)-led coalition government also proposed a 10 percent increase in the minimum monthly wage to provide relief to low-income workers amid ongoing economic challenges.
The proposals were announced by Finance Minister Muhammad Aurangzeb while presenting the federal budget for the fiscal year 2026-27 during a National Assembly session chaired by Speaker Sardar Ayaz Sadiq.
Addressing the House, the finance minister said the budget was being presented at a time when Pakistan had regained economic credibility and international confidence.
“This budget is being presented at a time when Pakistan has earned a position, both among its people and in the international community, as a country whose voice is heard and whose friendship is valued,” he said.
The budget session witnessed noisy scenes as opposition lawmakers chanted slogans and protested during the minister’s speech, while treasury members welcomed Prime Minister Shehbaz Sharif by thumping desks. Members of the opposition also displayed placards and posters inside the House.
In addition to salary and pension increases, the government announced significant tax relief measures for the salaried class. The Finance Bill proposes restructuring income tax slabs and reducing tax rates for several income brackets, while also abolishing the surcharge imposed on salaried individuals.
Under the proposed tax structure, salaried persons earning between Rs2.2 million and Rs3.2 million annually will pay Rs116,000 plus 20 percent of the amount exceeding Rs2.2 million.
Individuals earning between Rs3.2 million and Rs4.1 million annually will pay Rs316,000 plus 25 percent of the amount exceeding Rs3.2 million.
For salaried taxpayers earning between Rs4.1 million and Rs5.6 million annually, the proposed tax will be Rs541,000 plus 29 percent of the amount exceeding Rs4.1 million.
Meanwhile, individuals earning between Rs5.6 million and Rs7 million annually will be liable to pay Rs976,000 plus 32 percent of the amount exceeding Rs5.6 million.
The government said the revised tax structure, combined with the abolition of the surcharge, is aimed at reducing the tax burden on salaried employees and providing greater disposable income to middle-income households.
The proposed measures are part of the government’s broader strategy to support public sector employees, pensioners and wage earners while maintaining fiscal discipline and sustaining economic recovery.
