Govt proposes 7% salary, pension hike in FY2026-27 budget

• Finance minister unveils FY2026–27 budget in NA.
• PTI lawmakers protest during budget speech in NA.
• Govt proposes tax relief for salaried individuals.
  

The federal government has proposed a 7% increase in the salaries of public sector employees in the federal budget for fiscal year 2026–27

The PML-N-led coalition government also proposed a 7% increase in pensions for retired government employees. In addition, the federal government has suggested a 10% increase in the minimum wage.

The proposal for the salary hike was unveiled by Federal Finance Minister Muhammad Aurangzeb during his National Assembly budget speech for the fiscal year 2026-27 on Friday.

Expressing his views on the assembly floor, during a session being chaired by NA Speaker Ayaz Sadiq, FinMin noted: “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.”

The session witnessed noisy scenes, with opposition members raising slogans while treasury lawmakers welcomed PM Shehbaz by thumping desks in the lower house.

During the proceedings, PTI lawmakers also brought placards and posters into the NA.

Furthermore, the government proposed income tax relief in four slabs for salaried individuals and the abolition of the surcharge on the salaried class.

The Finance Bill proposed reducing income tax rates for salaried taxpayers through restructuring of tax slabs, with additional intermediate slabs introduced.

For salaried persons earning between Rs2.2 million and Rs3.2 million annually, the proposed tax is Rs116,000 plus 20% of the amount exceeding Rs2.2 million.

For those earning between Rs3.2 million and Rs4.1 million annually, the proposed tax is Rs316,000 plus 25% of the amount exceeding Rs3.2 million.

For salaried individuals earning between Rs4.1 million and Rs5.6 million, the proposed tax is Rs541,000 plus 29% of the amount exceeding Rs4.1 million.

For those earning between Rs5.6 million and Rs7 million, the proposed tax is Rs976,000 plus 32% of the amount exceeding Rs5.6 million.