Proposed Salary Tax Rates for Salaried Individuals in Pakistan Budget 2026-27
The Finance Bill for the 2026‑27 budget proposes a reduction in income tax rates for salaried individuals. Most salaried taxpayers above Rs. 2.2 million in annual taxable income will enjoy a reduction in their tax liability.
Here is the proposed slabs, existing salary tax rates, and how much salaried individuals can save once the changes in tax rates take effect.
Proposed vs. Existing Salary Tax Rates for FY 2026‑27
| S.No | Taxable Income | Existing Tax Rate | Proposed Tax Rate |
|---|---|---|---|
| 1 | Up to Rs. 600,000 | 0% | 0% |
| 2 | Rs. 600,000 – Rs. 1,200,000 | 1% of amount exceeding Rs. 600,000 | 1% of amount exceeding Rs. 600,000 |
| 3 | Rs. 1,200,000 – Rs. 2,200,000 | Rs. 6,000 + 11% of amount exceeding Rs. 1,200,000 | Rs. 6,000 + 11% of amount exceeding Rs. 1,200,000 |
| 4 | Rs. 2,200,000 – Rs. 3,200,000 | Rs. 116,000 + 23% of amount exceeding Rs. 2,200,000 | Rs. 116,000 + 20% of amount exceeding Rs. 2,200,000 |
| 5 | Rs. 3,200,000 – Rs. 4,100,000 | Rs. 346,000 + 30% of amount exceeding Rs. 3,200,000 | Rs. 316,000 + 25% of amount exceeding Rs. 3,200,000 |
| 6 | Rs. 4,100,000 – Rs. 5,600,000 | Rs. 616,000 + 35% of amount exceeding Rs. 4,100,000 | Rs. 541,000 + 29% of amount exceeding Rs. 4,100,000 |
| 7 | Rs. 5,600,000 – Rs. 7,000,000 | Rs. 1,141,000 + 35% of amount exceeding Rs. 5,600,000 | Rs. 976,000 + 32% of amount exceeding Rs. 5,600,000 |
| 8 | Above Rs. 7,000,000 | Rs. 1,631,000 + 35% of amount exceeding Rs. 7,000,000 | Rs. 1,424,000 + 35% of amount exceeding Rs. 7,000,000 |
Who Benefits the Most From the Proposed Salary Tax Slabs?
The first two taxable slabs (income up to Rs. 2.2 million) are unchanged, means initial salaried tax slabs won’t see any difference. The change starts from slab 4 onward up to slab no 7.
- Change in tax rates for slab 2.2 million to 3.2 million is 3%, from 23% to 20%.
- Change in tax rates for slab 3.2 million to 4.1 million is 5%, from 30% to 25%.
- Change in tax rates for slab 4.1 million to 5.6 million is 6%, from 35% to 29%.
- Change in tax rates for slab 5.6 million to 7 million is 3%, from 35% to 32%.
- Moreover, no change in rate of salary tax rate of slab of salary income exceeding Rs 7 Million which is 35%.
How to Calculate Your Tax Under the New Slabs
To calculate your annual tax liability of salary income, you have to identify which slab your taxable salary income falls into. Then apply the formula for that slab: the fixed amount of salary tax plus the stated percentage of salary tax rate of that slab multiply by the income exceeding the slab’s lower threshold. For example, someone earning Rs. 4,500,000 falls in slab 6: Rs. 541,000 + 29% of (Rs. 4,500,000 − Rs. 4,100,000) = Rs. 541,000 + Rs. 116,000 = Rs. 657,000.
Additional Tax Surcharge Removed
Government of Pakistan has also proposed in the budget 2026-2027 removal of tax surcharge @9% on salary income if it is above than Rs 10 Million Rupees per annum. It is in addition to salary tax rates reductions proposed in the budget.
FAQs Section
Once the Finance Bill 2026-2027 is passed in the National Assembly, then it will effective from the start of the new financial year (July 1 2026).
No, there is no change in slab of income exempt from tax which is Rs. 600,000 annually currently.
Salaried individuals earning between Rs. 3.2 million and Rs. 5.6 million are getting the tax relief in this proposed salary tax slabs.
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