ISLAMABAD (PEN) : The federal government has introduced revised income tax slabs for salaried individuals as part of the Finance Bill 2025-26. The updated tax structure aims to provide relief for low-income earners while increasing tax obligations for higher earners and pensioners with substantial incomes.
The National Assembly approved the budget on Thursday in a session chaired by Speaker *Sardar Ayaz Sadiq*, where the Finance Bill received majority support and opposition cut motions were rejected.
Income Tax Slabs for Salaried Class
Under the new framework, individuals earning up to *Rs600,000 annually will be exempt* from income tax. Salaries exceeding this threshold will be subject to progressive taxation, as outlined below:
Income up to Rs600,000/year:* 0% tax (fully exempt)
Rs600,001 to Rs1,200,000/year:* 1% tax on amount exceeding Rs600,000
Rs1,200,001 to Rs2,200,000/year:* Fixed tax of Rs6,000 plus 11% on income above Rs1.2 million
Rs2,200,001 to Rs3,200,000/year:* Fixed tax of Rs116,000 plus 23% on income above Rs2.2 million
Rs3,200,001 to Rs4,100,000/year:* Fixed tax of Rs346,000 plus 30% on income above Rs3.2 million
Above Rs4,100,000/year:* Fixed tax of Rs616,000 plus 35% on income exceeding Rs4.1 million
New Tax on High-Value Pensions
A notable addition to the Finance Bill is the imposition of a *5% income tax on pension earnings exceeding Rs10 million (Rs1 crore) annually*. Pensioners receiving less than Rs10 million per year will continue to enjoy tax exemption. This provision seeks to broaden the tax base by including wealthy retirees while safeguarding relief for average pensioners.
Budget Approval and Assembly Proceedings
The National Assembly passed the Finance Bill 2025-26 after a clause-wise vote, with all opposition cut motions turned down. The session was subsequently adjourned until 11 a.m. the following day.
This revised tax structure is part of the government’s broader fiscal strategy to balance social equity with revenue generation amid evolving economic conditions.
