• Those earning between Rs230,000-Rs341,000 per month likely to get some relief; maximum tax rate expected to be lowered from 35pc to 30pc
• Rs660bn to Rs700bn in fresh tax measures planned, including enforcement and new levies
• Govt targets Rs15.3tr FBR revenue in FY2026-27

ISLAMABAD: Significant relief is planned for salaried individuals earning between Rs230,000 and Rs341,000 a month in the upcoming budget, but a large segment of those making between Rs100,000 and Rs183,000 per month may not see any change, official sources told Dawn.

Facing limited fiscal space, the Shehbaz Sharif-led coalition government is set to unveil fresh tax measures worth Rs660 billion to Rs700bn in the 2026-27 budget.

The fiscal policies align with commitments under an International Monetary Fund programme aimed at achieving an ambitious revenue collection target.

In contrast to the broader revenue measures, the budget carries highly targeted good news for mid- and upper-level income earners.

Individuals earning between Rs230,000 and Rs300,000 a month are expected to see a steep reduction in their tax burden, official sources involved in budget preparations told Dawn.

A significant reduction is also planned for individuals earning between Rs266,000 and Rs341,000 a month, whose current slab carries a liability of Rs28,833 plus 30pc of income above Rs266,000.

Additionally, the maximum salary tax rate is under consideration for a cut to around 30pc from the existing 35pc.

However, no visible changes are expected for individuals drawing between Rs100,000 and Rs183,000 per month, a bracket where a large segment of the salaried class falls. The applicable tax for this group remains Rs500 plus 11pc of income above Rs100,001.

The exemption threshold will remain unchanged at Rs600,000 annually, while those earning up to Rs1 million a year will continue to face a token 1pc tax, a rate described as purely for documentation purposes.

The government has pledged to raise an ambitious Rs15.3 trillion in tax revenue through the Federal Board of Revenue in FY2026-27. The new target reflects a projection of an increase of Rs2.32tr, or 17.84 per cent over the collection of the outgoing fiscal year.

The initial plan envisions Rs 660 billion in tax measures — Rs260bn through new tax measures and Rs 400 billion via enforcement. To achieve the proposed target, autonomous tax growth is projected at Rs1.65tr based on a GDP growth target of 4pc and an inflation rate of 8.2pc.

With the current year’s revenue collection of Rs12.983tr and autonomous growth of Rs1.657tr, revenue collection will reach Rs15.3tr in FY27, including new tax or enforcement measures.

Officials involved in the preparations noted that the new target is over-ambitious and unrealistic, but the government has no option to reduce it. “We are under IMF programme and have to agree with the target,” an official said, adding that the FBR will face significant challenges in meeting its collection goals.

Finance ministry officials continue to present optimistic projections, seemingly hoping for a tax windfall without acknowledging economic headwinds and high inflation. With key industries contracting and consumer confidence fading, the feasibility of achieving the targets remains highly questionable.

Moreover, revenue collection could face setbacks due to a lower-than-expected allocation for the federal Public Sector Development Programme, which includes fewer new projects and remains notably smaller than those of the Punjab and Sindh provinces.

On the trade front, the government decided to slash the additional customs duty on 3,149 tariff lines and reduce regulatory duties to 20pc on more than 1,900 tariff lines.

However, a major decision to reduce automobile sector tariffs is on hold due to pressure from local manufacturers. The Tariff Policy Board recommended slashing the maximum duty on automobiles to 75pc from the existing 150pc. Prime Minister Sharif has constituted a committee to examine the proposal.

“This clearly shows the government’s intent to continue shielding the auto sector,” the official said, noting the move effectively delays the implementation of a five-year tariff reform plan.

Published in Dawn, June 11th, 2026