Monthly Tax-Free Salary Limit May Rise to Rs. 83,000 in Pakistan’s New Budget 2025-26
Introduction
In a significant development ahead of the Budget 2025-26, Pakistan has received approval from the International Monetary Fund (IMF) to revise its tax framework. One of the most anticipated proposals is the increase in the monthly tax-free salary limit from Rs. 50,000 to Rs. 83,000. This decision is expected to provide relief to thousands of salaried individuals across the country.
Key Highlights
- Proposed Tax-Free Salary Slab: Rs. 83,000/month
- Current Tax-Free Limit: Rs. 50,000/month
- Beneficiaries: Salaried individuals in the middle-income group
- Budget Year: 2025-26
- IMF Agreement: Approval granted on Pakistan’s request
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What Does This Mean for Salaried Employees?
If approved in the upcoming budget:
- Employees earning up to Rs. 83,000 monthly (approx. Rs. 996,000 annually) will be exempted from income tax.
- Increased savings for middle-income earners.
- Boost in spending power, which may stimulate the economy.
- Reduction in tax burden for small businesses and startups paying employee salaries.
Background: Why Is This Happening?
Pakistan is currently working under strict fiscal reforms advised by the IMF. To provide economic relief to the working class while also promoting domestic spending, this step has been proposed.
The move aligns with:
- Inflation adjustment needs
- Welfare-centric fiscal policies
- Public pressure for tax relief
- IMF’s support for equitable tax reforms
Economic Impact of the Proposed Tax-Free Limit
Positive Effects:
- Relief to low and middle-income groups
- Encouragement for formal employment
- Less tax evasion among small salaried workers
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Challenges:
- Revenue shortfall for FBR if not offset by other measures
- Need for expanding the tax net through other means
Frequently Asked Questions (FAQs)
Who will benefit from the new Rs. 83,000 tax-free salary limit?
All salaried individuals earning up to Rs. 83,000 per month will be fully exempted from income tax, if the proposal is passed in the final budget.
Is this tax-free limit confirmed?
Not yet. It is currently a proposal under discussion for the Federal Budget 2025-26 and will be finalized in the coming weeks.
When will the new budget be announced?
The Federal Budget 2025-26 is expected to be presented in the second week of June 2025.
Will this apply to both private and government employees?
Yes, it applies to all individuals falling within the salaried class under Pakistan’s tax laws.
How does it compare to other countries?
Pakistan’s proposed Rs. 83,000 (~USD 300) tax-free limit is competitive among developing nations, especially considering rising inflation and cost of living.
Conclusion
The potential increase in the tax-free salary limit from Rs. 50,000 to Rs. 83,000 could be a game-changer for Pakistan’s middle-income earners. With IMF support and public interest at its core, the move promises financial relief and greater take-home income for workers who form the backbone of Pakistan’s economy.
As the Budget 2025-26 nears its finalization, eyes are on the government to see how this bold tax proposal unfolds — and whether it can bring real change to the working class.
