ISLAMABAD – Some breath of fresh air for inflation weary salaried people, as Pakistani government proposed sweeping income tax cuts in Budget 2025-26.
Starting July 2025, under new tax regime introduced in Pakistan’s Federal Budget 2025–26, those earning Rs150,000 per month (Rs18Lac annually) will pay an income tax of Rs72,000, which breaks down to Rs6,000 per month.
This updated structure offers significant relief compared to previous years. The new tax slabs include 0% tax on the first Rs600,000, 1% on the next Rs600,000, and 11% on income between Rs1.2 million and Rs2.2 million.
Income Tax as per revised Slabs
| Slab | Tax Rate | Amount | Payable Tax |
| Up to 600,000 | 0% | 600,000 | — |
| 600,001 – 1,200,000 | 1% | 600,000 | 6,000 |
| 1,200,001 – 1,800,000 | 11% | 600,000 | 66,000 |
As a result, someone earning Rs150,000 monthly falls within the Rs1.2million–Rs2.2million bracket, paying a total of Rs72,000 annually. These changes aim to reduce the burden on middle-income salaried individuals while ensuring a more progressive and simplified tax system.
Tax Calculator 2025
| Monthly Salary | Annual Income | Annual Tax | Monthly Tax |
| Rs 60,000 | Rs 720,000 | Rs 1,200 | Rs 100 |
| Rs 70,000 | Rs 840,000 | Rs 2,400 | Rs 200 |
| Rs 80,000 | Rs 960,000 | Rs 3,600 | Rs 300 |
| Rs 90,000 | Rs 1,080,000 | Rs 4,800 | Rs 400 |
| Rs 100,000 | Rs 1,200,000 | Rs 6,000 | Rs 500 |
| Rs 200,000 | Rs 2,400,000 | Rs 162,000 | Rs 13,500 |
Income tax rate for individuals earning up to Rs 1.2 million annually has been reduced to just 1%, down from the previous 5%. The decision comes on the special instructions of Prime Minister Shehbaz Sharif and is seen as a response to public demand and cabinet-level feedback.
In addition to these cuts, Pakistani government announced a 1pc surcharge relief for professionals earning over Rs 1 million annually, aimed at retaining talent and countering the ongoing brain drain.
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