Who benefits from Budget 2026-27 as govt unveils key relief measures
The federal government unveiled the proposal in the Budget 2026-27 presented in the National Assembly. The measures are aimed at providing financial relief to government employees, pensioners and low-income workers.
Finance Minister Muhammad Aurangzeb announced the proposed increase in salaries for federal government employees during his budget speech. The government also suggested a matching 7% increase in pensions for retired public servants.
Alongside the salary and pension relief, the government proposed a 10% increase in the minimum wage. The move is intended to support workers facing the impact of rising living costs.
While presenting the budget, Aurangzeb said, "This budget is being presented at a time when Pakistan has achieved the status in the eyes of its people and the world as a country whose voice is listened to, and whose friendship is desired."
Finance Minister Aurangzeb said the government, under the instructions of Prime Minister Shehbaz Sharif, understands the financial pressure on both government and private salaried individuals. He added that relief has been designed to ease their burden.
The Finance Bill proposes restructuring of tax slabs with reduced income tax rates and new intermediate categories for salaried taxpayers.
New tax slabs proposed for different income groups
For individuals earning between Rs2,200,000 and Rs3,200,000 annually, the tax rate is proposed to fall from 23% to 20%. The tax formula will be Rs116,000 plus 20% of income above Rs2,200,000.
For those earning between Rs3,200,000 and Rs4,100,000, the rate is reduced from 30% to 25%, with tax set at Rs316,000 plus 25% of income above Rs3,200,000.
For income between Rs4,100,000 and Rs5,600,000, the rate drops from 35% to 29%. The proposed tax is Rs541,000 plus 29% of income above Rs4,100,000.
For salaried persons earning between Rs5,600,000 and Rs7,000,000, the rate is reduced from 35% to 32%, with tax calculated as Rs976,000 plus 32% of income above Rs5,600,000.
Surcharge on salaried class to be abolished
The government has also proposed the complete abolition of the surcharge imposed on salaried individuals. Aurangzeb said this has long been a demand of employees across the country.
He added that the surcharge had already been reduced from 10% to 9% in the previous budget. Its removal is now part of wider efforts to reduce financial stress on salaried taxpayers.
Other relief measures announced
Alongside tax reforms, the government has proposed a 7% increase in salaries for government employees. This move comes in response to rising inflation and living costs.
A 7% increase in pensions for retired employees has also been proposed, along with a 10% rise in the minimum monthly wage.
The budget session was chaired by National Assembly Speaker Ayaz Sadiq. Proceedings remained noisy as opposition members raised slogans during the speech.
Government lawmakers welcomed Prime Minister Shehbaz Sharif by thumping their desks in support. The atmosphere inside the lower house reflected the political tensions surrounding the budget announcement.
Also read: Budget 2026-27 unveiled amid loud protests by opposition in National Assembly
PTI lawmakers also brought placards and posters into the National Assembly during the proceedings. Their protest added to the charged environment as the government outlined its economic plans for the coming fiscal year.
The proposed increases will now be closely watched by employees, pensioners and labour groups. Many are waiting to see whether the measures will be approved and how much relief they will provide against inflation.
The government has tried to balance public relief with fiscal discipline through moderate increases in salaries and pensions. Whether the proposed hikes satisfy employees and pensioners may depend on future inflation and overall economic performance.
