Will Pakistan not increase salaries of government employees in Budget 2026-27?

ISLAMABAD – The federal government is reportedly planning to not announce any increase in salaries and pensions in the upcoming Budget 2026–27. However, the government aims at redirecting potential savings toward tax relief for salaried individuals. According to media reports, the plan suggests that instead of increasing pay and pension packages this year, the government may maintain current levels in order to reduce pressure on the national budget. The financial space created through this approach could be used to lower income tax rates for salaried employees, who are regarded as the country’s largest group of direct taxpayers. Official data indicated that the salaried class contributed over Rs425 billion in income tax during the first nine months of the ongoing fiscal year 2025-26, highlighting their increasing importance in overall revenue generation. Sources also suggest that policymakers are examining ways to provide relief to employees, particularly in comparison with other sectors such as retail, wholesale, exports, and real estate, which are considered to have relatively lower direct tax contributions. Meanwhile, the federal government has already begun initial preparations for the Budget 2026–27, which is expected to be presented in June 2026. Early-stage consultations and planning are underway as authorities assess revenue targets, expenditure priorities, and possible reforms aimed at balancing fiscal discipline with public relief measures.