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ISLAMABAD: The government is considering reducing the income tax burden on salaried individuals while refraining from increasing salaries and pensions in the upcoming budget, aiming to provide equitable fiscal relief to both public and private sector employees.
Informed sources told Dawn that Finance Minister Muhammad Aurangzeb has expressed a desire to lower tax rates and, if possible, raise the taxable income threshold for the salaried class in recognition of their significant contribution to revenue generation compared to retailers, wholesalers, exporters, and real estate players.
On the other hand, the government may keep salaries and pensions unchanged at current levels, using the resulting fiscal savings to provide tax relief instead. “There is no reason to increase salaries if it pushes employees into higher taxable income brackets, leaving government employees with little to no increase in take-home pay,” an official said. He added that with lower tax rates and higher taxable income thresholds, government employees would remain net beneficiaries even without a salary increase. “Government employees would not be worse off financially. That is neither the idea nor the intention,” he said.
