The federal government has announced a reduction in tax rates and abolition of surcharges for the salaried class and formal proposals have been presented in the budget.

Federal Finance Minister Muhammad Aurangzeb presented the budget for the financial year 2026-27 in the parliament, in which tax relief was announced for the salaried class.

According to the budget document, Prime Minister Shehbaz Sharif is aware of the problems of the public and private salaried class and on his instructions, the government has divided the salaried class into 4 slabs.

According to the relief proposed in the budget, it has been proposed to reduce the tax rate from 23% to 20% for individuals with an annual salary of Rs 2.2 million to Rs 3.2 million, and it has been proposed to reduce the tax rate from 30% to 25% for salaried individuals with an annual income of Rs 3.2 million to Rs 4.1 million.

Similarly, it has been proposed to reduce the tax rate from 35 percent to 29 percent for those earning between Rs 4.1 million and Rs 5.6 million, and from 35 percent to 32 percent for those earning between Rs 5.6 million and Rs 7 million.

The budget document states that it has also been decided to abolish the surcharge imposed on the salaried class, and this was a long-standing demand, while in last year’s budget, the surcharge was reduced from 10 percent to 9 percent, but now it is proposed to abolish it completely.

It should be noted that the federal government has proposed a 7 percent increase in salaries and pensions in the new fiscal year’s budget.