Business Desk 
Jun 21, 2025
Finance Minister Muhammad Aurangzeb presents Federal Budget 2024-2025 before the National Assembly. — INP/File
Finance Minister Muhammad Aurangzeb has announced a change for the salaried class revealing that the tax rate for individuals, earning up to Rs1.2 million a year will drop from 5% to 1%.
The development comes after the government, in its Rs17.57 trillion budget for the FY26 has sought across-the-board cuts in income tax rates for the salaried class.
During a Senate session, Aurangzeb stated: “The salaried class bears the burden of inflation and also pays [due] taxes. The reduction in the income tax is already part of the proposed budget [for FY26]. On the directions of Prime Minister Shehbaz Sharif, the government has reduced tax on those earning from Rs600,000 to Rs1.2 million per year from [the proposed] 2.5% to a (mere) 1%.”
"We hope that this move will not only result in the increase of disposable income of the [salaried] class but also restore their trust in the taxation system,” the finance minister added.
The move comes after PM Shehbaz, earlier this week, told the federal cabinet of a 1% tax imposed on the people from the said salary bracket.
On the other hand, the tax rate for those earning up to Rs2.2 million annually has been reduced from 15% to 11% — a 4% fall in the budget FY26.
For those earning between Rs2.2 million and Rs3.2 million, the tax rate is expected to ease from 25% to 23%.
Tax of solar panels
To note, the initial 18% tax proposed on solar panels to promote the local industry has been reduced to 10% and warned those hoarding imported solar panels saying that action would be taken against individuals who had increased the price in advance.
It is worth noting that the PM Shehbaz-led government has set out the Federal Bureau of Revenue's (FBR) tax collection target of Rs14,131 billion — reflecting an 18.7% increase compared to the previous fiscal year.
