Pakistanis earning under Rs50,000 to get ‘Full Tax Exemption’ in Budget 2025–26

FBR Plans Tax Reforms for Transparency and Stability

By DTD- On May 6, 2025

ISLAMABAD – Relief for millions of Pakistanis as the government is considering raising income tax exemption limit in the upcoming Budget, potentially easing the burden on the salaried class.

Reports in local media said officials are reviewing a proposal to increase the current tax-free income threshold, which stands at Rs. 600,000 per year (Rs. 50,000 per month). If approved, this move will offer much-needed financial relief to low- and middle-income earners.

The development follows record-breaking tax contributions from salaried individuals. In just the first nine months of the ongoing fiscal year, the salaried class paid a remarkable Rs. 391 billion in income tax — Rs. 23 billion more than the total they paid in the entire previous year.

This growing tax contribution has not gone unnoticed. Policymakers are now exploring ways to give back to this segment of society, acknowledging both their loyalty and the rising cost of living.

For many, a change in the exemption limit could mean more take-home pay and less monthly stress. It’s a move that not only boosts household budgets but could also stimulate economic activity by increasing disposable income.

While the final decision will be announced in the federal budget, expected next month, early signs suggest the government is committed to supporting its working population.

Ministry of Finance also set schedule for Pakistan’s federal budget for FY 2025-26, with the presentation planned for June 2025.

FBR is seeking ways to expand the tax base, simplify procedures, and phase out exemptions. This initiative aims to ensure transparency and economic stability for the upcoming fiscal year.