ISLAMABAD: The government on Friday notified a 10 per cent pay increase for civil servants and armed forces personnel, an ad hoc relief allowance that takes effect retroactively from July 1, 2025.

The Ministry of Finance issued a notification saying that the president had sanctioned the raise, which was first announced in the 2025-26 federal budget, approved by the parliament and the president.

According to the notification, the president sanctioned “with effect from July 1, 2025 and till further orders, an Ad-hoc Relief Allowance-2025 at the rate of 10pc of running basic pay to Armed Forces Personnel, Civil Armed Forces and to all the Civil Employees of Federal Government.”

The allowance also applies to civilians paid from defence estimates and contract employees on standard terms. The allowance will be subject to income tax and is admissible during leave and the entire period of leave preparatory to retirement, but not during extraordinary leave, the notification said.

It specified that the relief “will not be treated as part of emoluments for the purpose of calculation of pension, gratuity and recovery of house rent.” It will also not be given to employees posted or on deputation abroad but will become admissible upon their repatriation.

For the allowance, the term “basic pay” will include personal pay granted from annual increments that go beyond the maximum of existing pay scales. The notification said the funds would be accommodated within the 2025-26 budget.

Separately, the ministry also notified a disparity reduction allowance at 30pc of the basic pay as of June 30, 2022. This will apply to officers and officials in BPS-1 to 22 who were already receiving the allowance under a July 2022 memorandum. For employees appointed on or after July 1, 2022, the DRA will be based on the initial BPS of 2017.

Published in Dawn, July 5th, 2025