The government is considering a tax relief package worth up to Rs50 billion for salaried individuals in the upcoming federal budget, aiming to ease financial pressure on employees across various income groups. Policymakers are reviewing several proposals that include lower tax rates, revised income thresholds, and a broader tax structure designed to provide greater relief to middle-income earners.
One of the main proposals under discussion is increasing the number of income tax slabs from six to eight. Officials believe that adding more slabs would create a smoother and more balanced taxation system, reducing the burden on taxpayers by ensuring income is taxed more gradually across different earning levels.
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In addition, the government is considering a five-percentage-point reduction in income tax for individuals earning up to Rs267,000 per month. If approved, the tax rate for this category would fall from 25% to 20%, benefiting nearly 400,000 salaried employees. The proposal is being viewed as one of the most significant relief measures currently under review.
Meanwhile, authorities are discussing retaining the existing 25% tax rate for individuals earning up to Rs341,000 per month, a category that includes around 160,000 taxpayers. Other proposals include introducing a 29% tax rate for monthly incomes up to Rs467,000 and a 32% rate for earnings reaching Rs583,000, creating a more gradual progression between tax brackets.
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For higher-income groups, policymakers have proposed maintaining the maximum 35% income tax rate on monthly earnings above Rs583,000. At the same time, officials are reviewing a separate proposal to apply a 35% rate on annual incomes exceeding Rs7 million while also considering adjustments that could ease the tax burden on certain high-income earners.
Another key proposal under discussion is the removal of the surcharge currently imposed on individuals earning more than Rs10 million annually. The measures are still being finalised and may be adjusted before the federal budget is presented. If approved, the package would represent one of the most substantial tax relief efforts for the salaried class while reshaping the income tax framework for the next fiscal year.