The federal government has introduced new income tax slabs for salaried individuals and government employees, which will come into effect from July 1, 2026 after the approval of the Finance Bill 2026 by the National Assembly.
Under the revised tax structure, individuals earning up to Rs600,000 annually will remain exempt from income tax. Salaried persons earning between Rs600,001 and Rs1.2 million per year will pay income tax at a reduced rate of 1 per cent, providing relief to lower-income earners.
Taxpayers with annual incomes ranging from Rs1.2 million to Rs2.2 million will be required to pay a fixed tax of Rs6,000, along with 11 per cent tax on income exceeding Rs1.2 million.
For individuals earning between Rs2.2 million and Rs3.2 million annually, the government has reduced the tax rate on additional income from 23 per cent to 20 per cent. They will pay a fixed tax of Rs116,000 plus 20 per cent on income above Rs2.2 million.
Under the new tax system, those earning between Rs3.2 million and Rs4.1 million a year will pay a fixed tax of Rs346,000 and 25 per cent on income exceeding Rs3.2 million. Taxpayers in the Rs4.1 million to Rs5.6 million bracket will be liable for a fixed tax of Rs541,000 plus 29 per cent on additional income.
Meanwhile, individuals earning between Rs5.6 million and Rs7 million annually will pay a fixed tax of Rs976,000 along with 32 per cent on income above Rs5.6 million.
For the highest income bracket, taxpayers earning more than Rs7 million per year will be required to pay a fixed tax of Rs1.424 million, in addition to 35 per cent tax on income exceeding Rs7 million.
Earlier today, the National Assembly on Tuesday passed the Finance Bill 2026-27 presented by Finance Minister Muhammad Aurangzeb with a majority vote.
Federal Minister for Finance and Revenue Senator Muhammad Aurangzeb moved the bill for the House to approve the budget proposals for the next fiscal year after the opposition staged a walkout.
After the passage of Federal Budget 2026-27, the National Assembly session was adjourned and will now meet on Wednesday at 11:00 am.
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