Govt proposes 7% salary & pension hike, 10% minimum wage increase

The federal government has announced a proposed 7% increase in salaries for public sector employees along with a 7

The federal government has announced a proposed 7% increase in salaries for public sector employees along with a 7% rise in pensions for retired government staff in the upcoming fiscal year 2026–27 budget.

According to official budget documents presented by Finance Minister Muhammad Aurangzeb in the National Assembly, the government has also suggested increasing the minimum wage by 10% to provide relief to low-income workers.

The budget proposal was presented amid a tense session in the lower house, where opposition lawmakers staged protests and raised slogans, while treasury benches welcomed the prime minister with desk thumping.

During his speech, the finance minister highlighted that Pakistan is being viewed positively on the global stage and emphasized economic stability and improved national standing.

In addition to salary and pension adjustments, the government has introduced tax relief measures for salaried individuals, including restructuring of income tax slabs and removal of the surcharge on the salaried class.

Under the proposed tax plan, revised slabs have been introduced for different income groups. Salaried individuals earning between Rs2.2 million and Rs3.2 million annually would be taxed Rs116,000 plus 20% on income above the threshold. For those earning up to Rs4.1 million, the tax would be Rs316,000 plus 25% on the excess amount. Higher earners in subsequent slabs would face rates of 29% and 32% respectively, depending on income levels.

The proposed reforms aim to balance fiscal pressure while offering partial relief to salaried taxpayers amid ongoing economic challenges.