Government plans tax reduction for salaried employees in budget

The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has presented the proposals related to the budget 2026-27 to the Finance Ministry, which are based on the concept of relief to the salaried class and incentives to businesses.

FPCCI suggested that the income tax rate for salary earners should be lowered from 35 percent to 30 percent to increase their disposable income and help ease daily expenses. The federation said that this adjustment will alleviate the burden on households and help meet domestic demand.

Moreover, the FPCCI proposed abolishing the super tax entirely, saying its removal would benefit both salaried individuals and the broader business community. The group also called for resuming the previous tax regime of goods transport as a measure to reduce the cost of doing business and encourage goods exports.

For the IT sector, the federation appealed for maintaining this current rate of 25 percent export duty till 2035 and raised the SME turnover threshold from Rs 250 million to Rs 500 million to encourage the growth of small companies. FPCCI also asked for a cut in the tax rate for the manufacturing sector by 9 percent to 20 percent, to stimulate manufacturing activities and bring in new investment. The proposals also contain specific measures to make compliance easier and the business environment more conducive.

Consequently, the FPCCI believes these steps will revive economic activity, support job creation and balance fiscal pressures while protecting vulnerable taxpayers. But officials said that fiscal space and revenue targets will drive the final decisions and the government has to balance the short-term reliefs with the long-term budget requirements.