A big relief is expected as the government is preparing to provide relief to the salaried class in the federal budget for the upcoming fiscal year 2025-26. According to sources, proposals have been made to reduce the income tax rate, increase the salaries of government employees, and provide relief measures for various sectors, which are being worked on under the special instructions of the prime minister.
According to sources, proposals to reduce income tax slabs by up to 2.5 per cent are under consideration.
According to the new proposals, the income tax rate on those earning one lakh rupees per month has been proposed to be reduced from 5 per cent to 2.5 per cent. The income tax for those earning one lakh rupees per month is likely to be reduced from 15 per cent to 12.5 per cent.
Similarly, it is proposed to reduce the income tax on those earning two lakh rupees per month from 25 per cent to 22.5 per cent. And the tax rate on those earning three lakh rupees per month is likely to be reduced from 30 per cent to 27.5 per cent.
A hike in the salaries of government employees has also been proposed, which is expected to be announced in the budget speech.
According to sources, the government is also preparing relief measures for small farmers, including the launch of loan schemes and a reduction in production costs. Along with this, tax relief has also been proposed for the manufacturing and construction industries.
The next budget is likely to eliminate the withholding tax of Rs 200 billion on raw materials. A reduction in withholding tax has also been proposed on raw materials used in the construction sector.
According to sources, detailed discussions have been held between the government and the IMF on these proposals, and the IMF’s initial response has been positive. However, the IMF has imposed a condition of an alternative revenue plan in exchange for providing relief, on which the government’s economic team has also given a briefing.
The final approval of the budget proposals will be given in the Finance Minister’s budget speech, which will be presented in the middle of this month.
Read also: Govt plans power subsidies for 200-300 unit households in budget 2025-26
The Standing Committee on Privatization has recommended that the federal government provide concessions to domestic power consumers using 200 to 300 units in the upcoming budget. The proposal was made during a meeting chaired by Dr. Farooq Sattar, where lawmakers expressed grave concerns over worsening load shedding, inadequate heatwave preparations, and poor service delivery by power distribution companies (DISCOs) .
Dr. Sattar sharply criticized K-Electric, Hyderabad Electric Supply Company (HESCO), and Sukkur Electric Power Company (SEPCO), accusing them of failing the public during extreme weather. “These companies have killed people while they were alive,” he said, referencing widespread outages amid record temperatures. The committee also discussed complaints about excessive meter rents charged during Eid-ul-Adha and noted the Sindh government’s initiatives to address energy issues .
Members emphasized the need for stricter regulatory oversight of DISCOs and called for an accelerated shift toward renewable energy solutions to mitigate the crisis. The meeting highlighted unresolved challenges in Pakistan’s power sector, including liquidity constraints and aging infrastructure, which have exacerbated outages despite recent tariff adjustments .
The committee’s budget proposal aims to ease the burden on middle-income households, aligning with broader reforms tied to IMF-mandated privatization targets for state-owned utilities, including PIA and DISCOs .
