ISLAMABAD: The federal government is considering significant income tax relief for salaried individuals earning between one and three lakh rupees per month in the upcoming Budget 2026–27, according to official sources.
These measures have been initiated following the directives of Prime Minister Shehbaz Sharif, while the government is preparing several measures to ensure the burden of taxes is reduced for the salaried and middle class people. According to the initial proposal, tax rates will be lowered for employees earning within the mentioned amount.
It was revealed that a complete briefing has been held for the proposed measures and these tax cuts were recommended by officials and presented to the prime minister. Several proposals of tax cut at the rate of three percent, five percent, and ten percent will be finalized upon the recommendation of IMF.
Around 550,000 Pakistani citizens earn up to two to three lakh rupees per month and the government plans to extend tax cut relief for this category.
It was informed that this measure was taken to provide relief to the salaried class, who had been facing difficulties owing to the rising cost of living in the country.
The final decision is expected once negotiations with the IMF are concluded and the budget proposals are formally approved.
Finance Minister presents Pakistan Economic Survey, claiming 3.7 percent growth in GDP
Earlier, Federal Finance Minister Muhammad Aurangzeb presented the Pakistan Economic Survey of the financial year 2025-2026, claiming growth of 3.7 percent in Gross Domestic Product (GDP) in the ongoing fiscal year.
Addressing a press conference in Islamabad, Finance Minister Muhammad Aurangzeb presented the survey, which he said told a story of resilience and discipline shown during the previous year. He said that this growth is higher than last year’s growth of 3.18pc but falls short of its target of 4.2pc.
He said the country began the outgoing fiscal year with uncertainty due to tariffs. “Then, by the end of July, we reached a point where we could be in a competitive position with respect to our exports, especially to the US,” he added.
Then there were floods in August and September 2025, followed by a regional conflict in March this year. “These challenges tested Pakistan’s resilience,” he said, adding that the government was able to deal with them and remained on the path of moving from stabilisation to growth.
He said GDP growth in FY26 was recorded at 3.7 per cent, against a target of 4.2 percent. However, the economic survey stated that the economy improved its growth momentum in FY2026, compared to the previous year, when GDP growth was recorded at 3.18pc.
“The improvement owes to effective macroeconomic management, better fiscal account, growth in the large-scale manufacturing (LSM) sector, resilience of the agriculture sector to floods of 2025, exchange rate stability, and reforms under the IMF Extended Fund Facility (EFF) Programme,” it stated.
For his part, Aurangzeb also pointed out that global growth had reduced to 3.1pc from 3.7pc due to the factors he elaborated on earlier in the press conference. The finance minister said that Pakistan had recorded GDP growth of 3.7pc, which was the highest in the past four years. The finance minister recalled that GDP growth in FY2023 was -0.2pc, 2.6pc in FY2024, and 3.2pc in FY2025.
He said it was earlier estimated that GDP growth would exceed 4pc, but it did not happen due to the ongoing conflict in the Middle East. “We have still reached a historically high size of the economy at Rs126.9 trillion,” he said. The minister said GDP per capita income had reached $1,901, which was $1,751.
Giving a sector-wise breakdown, he said growth in agriculture was recorded at 2.89pc, compared to 1.53pc in the last fiscal year. “This was despite floods,” he said, adding that the crop sub-sector showed positive growth. After contraction, it was recorded at 1.44pc, the finance minister said.
He added the livestock sector also “continues to go from strength to strength”. Aurangzeb said 6.1pc growth was recorded in large-scale manufacturing (LSM) in FY26, which was the highest in the last four years. He elaborated that positive growth was seen in 16 of LSM’s 22 sub-sectors.
“So it’s not one single sector that is leading or contributing to this 6.1pc turnaround in LSM. It is broadband growth,” he said. He further said that prominent year-on-year growth was witnessed in this sector. “To give you some examples, there was a 10pc increase in the demand for cement, 17pc for fertiliser, 5pc for petroleum, 31pc for automobiles and 9pc for mobile phones.”
Noting that the services sector made up close to 58 percent of Pakistan’s GDP, he said 4.9 percent growth was recorded in this sector in the outgoing fiscal year.
He particularly mentioned communication and information services, which he said recorded a growth of 7.52pc. The growth in this sub-sector in FY26 was also the highest over the past four years.
