Govt to review tax rates for top income earners in next budget

Speaking at the Senate Standing Committee on Finance, Finance Minister Muhammad Aurangzeb announced on Wednesday that the government plans to review tax rates for the highest income earners in the upcoming federal budget.

He acknowledged the need for tax adjustments for top income brackets, highlighting that while the tax rate for individuals earning over Rs 100,000 per month was reduced from 5% to 1%, the significant relief provided in the last budget had not been widely recognised.

The minister noted that the government had already provided substantial tax relief to salaried individuals in the 2025-26 budget, cutting tax rates across all income slabs to ease financial pressures amid ongoing economic challenges. However, no relief was granted to the highest income tax bracket.

The revised tax structure under the last Finance Act significantly lowered rates for salaried individuals in lower and middle-income tiers, aiming to support them during tough economic conditions.

Aurangzeb also reassured the committee that the government was ready to brief them on the current economic situation without waiting for the next budget. He emphasised the success of technology-driven tax reforms but assured that efforts were being made to balance tax collection with protecting livelihoods.

Senator Abdul Qadir urged for a balanced approach, saying taxes should not harm the living standards of the people. Senator Sherry Rehman added that repeatedly taxing the same segments of society was not a sustainable revenue model and stressed the need to address unemployment, particularly in the public and private sectors. 

In response, the finance minister assured that efforts were underway to ensure compensation packages for workers affected by closures of institutions, citing examples like bank privatisation.