Govt Announces 10% Salary Raise and New Tax Slabs for FY2025-26
ISLAMABAD: The federal government has officially announced a 10% Ad Hoc Relief Allowance for government employees from Basic Pay Scale (BPS) 1 to 22, effective July 1, 2025, according to a notification issued by the Treasury Department.
The relief allowance is calculated as 10% of the basic pay and is part of the government’s broader effort to cushion employees against rising inflation. However, the notification clearly states that this allowance will not apply to employees posted abroad or on deputation.
The additional financial burden will be managed within the revised budget estimates for FY2025-26, meaning no extra budget allocations will be required.
Revised Income Tax Slabs for Salaried Individuals
Alongside the relief measure, the government has also introduced new income tax slabs for salaried individuals in the 2025-26 budget:
Income up to Rs600,000/year – Exempt from income tax.
Rs600,001 – Rs1.2 million/year – 1% tax on the amount exceeding Rs600,000.
Rs1.2 million – Rs2.2 million/year – Rs6,000 fixed tax plus 11% on the amount exceeding Rs1.2 million.
Rs2.2 million – Rs3.2 million/year – Rs116,000 fixed tax plus 23% on the amount above Rs2.2 million.
Rs3.2 million – Rs4.1 million/year – Rs346,000 fixed tax plus 30% on the amount exceeding Rs3.2 million.
Above Rs4.1 million/year – Rs616,000 fixed tax plus 35% on the amount exceeding Rs4.1 million.
These changes reflect the government’s commitment to progressive taxation while also offering salary relief to public sector employees amidst ongoing economic challenges.
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