The federal government has announced a reduction in tax rates and abolition of surcharge 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 relief proposed in the budget, it was proposed to reduce the tax rate from 23 percent to 20 percent for individuals with an annual salary of 2.2 million to 3.2 million rupees, and it was proposed to reduce the tax rate from 30 percent to 25 percent for salaried individuals with an annual income of 3.2 million to 4.1 million rupees.

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.

According to the budget document, Prime Minister Shehbaz Sharif has addressed the problems of the government and private salaried class.