The government is considering providing tax relief of up to Rs50 billion to the salaried class in the upcoming federal budget, with several proposals under discussion aimed at reducing the tax burden on employees across different income brackets.
The proposed measures include increasing the number of income tax slabs, reducing tax rates for certain salary groups and revising tax thresholds for higher-income earners.
According to sources, the government is working on a package that could provide up to Rs50 billion in tax relief to salaried individuals in the next fiscal year's budget.
People earning more than Rs183,000 per month are expected to benefit from the proposed changes, while consultations are continuing on the final structure of the relief measures.
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One of the key proposals under consideration is increasing the number of income tax slabs from the current six to eight. Officials believe the move could create a more gradual tax structure and provide relief to taxpayers in different income categories.
Tax cut for income up to Rs267,000 per month
Sources said a five-percentage-point reduction in income tax has been proposed for individuals earning up to Rs267,000 per month. If approved, the tax rate for this category would be reduced from 25% to 20%.
Approximately 400,000 salaried employees fall within this income bracket and could benefit from the proposed reduction.
The government is also considering maintaining the current 25% tax rate for individuals earning up to Rs341,000 per month. According to sources, around 160,000 taxpayers are included in this category.
New tax rates under review
Additional proposals being discussed include imposing a 29% tax rate on monthly income of up to Rs467,000. A separate proposal suggests a 32% tax rate for individuals earning up to Rs583,000 per month.
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Meanwhile, it has been recommended that the maximum income tax rate of 35% continue to apply to monthly earnings above Rs583,000.
Changes proposed for high-income earners
Sources said a proposal is also under consideration to impose a 35% tax rate on individuals earning more than Rs7 million annually. At the same time, policymakers are reviewing options to relax the tax threshold for high-income earners.
Another proposal under discussion is the abolition of the surcharge currently imposed on individuals earning more than Rs10 million per year.
The proposals are still under review and are expected to be finalized before the presentation of the federal budget. If approved, the changes would form part of the government's broader effort to provide relief to the salaried class while restructuring the income tax framework for the next fiscal year.
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