Business Desk 
May 12, 2025
In a bid to provide relief to the middle-class segment of society, the federal government is planning to reduce the tax on salary in Pakistan by up to 10% in the upcoming fiscal budget.
The fate of the proposal, which is reportedly being discussed by the lawmakers, depends on approval from the International Monetary Fund (IMF) during talks scheduled to be held from May 14 to 22, 2025.
The proposed cut in tax deduction on salary in Pakistan would benefit salaried individuals, amounting to an estimated relief of around Rs50 billion in the 2025–26 fiscal year.
If approved, individuals with an income up to Rs1 million will not have to pay income tax. The proposal is being considered owing to higher-than-expected revenue collection from the salaried class, ProPakistani reported, citing sources in the Federal Board of Revenue (FBR).
Tax on salary in Pakistan
During the first 10 months of the ongoing fiscal year, salaried workers paid over Rs450 billion in taxes, and the figure is projected to reach Rs550 billion by June.
Currently, the rate of tax deduction on salary in Pakistan for middle-income earners, with monthly salaries of Rs200,000–300,000, is up to 45%. Whereas, those earning over Rs1 million per month are bound to pay a 10% surcharge on top of a 40% tax rate.
The government is said to be also exploring a reduction in corporate tax, super tax, and withholding duties, alongside the removal of the federal excise duty on property transactions, aiming to widen the scope of tax relief besides just the tax on salary in Pakistan.
