Salaried Class Alliance calls for tax relief, revision of slabs in FY26 budget

The Salaried Class Alliance Pakistan has formally requested the government to revise tax slabs, increase exemption limits, and reintroduce key deductions to create a more balanced and fair taxation system. 

In a letter addressed to Finance Minister Senator Muhammad Aurangzeb, the Alliance highlighted the rising tax collection from the salaried class, which has surged from Rs 76 billion in 2019 to an expected Rs 570 billion in 2025.

While the Alliance acknowledged the government’s efforts to increase revenue, it expressed concern that the salaried segment has borne a disproportionate share of the tax burden. 

The letter emphasized that many salaried individuals are struggling with stagnant wages amid high inflation, making it harder for them to maintain a decent standard of living.

The Alliance further pointed to the removal of tax credits and deductions, including those for investments in various financial instruments and health insurance, under the Finance Act 2022. They also noted the impact of additional tax hikes, including a 10% surcharge introduced through the Finance Act 2024. 

The Alliance argued that these measures have made life more difficult for salaried individuals, many of whom are now seeking employment abroad for better opportunities.

Additionally, the Alliance raised concerns about the unchanged exemption threshold, which has remained at Rs 600,000 for years, despite inflation. The medical allowance exemption, while still in place, has not kept up with rising healthcare costs, the Alliance pointed out.

The Alliance also highlighted that salaried individuals cannot deduct employment-related expenses, unlike other categories of taxpayers. They compared Pakistan’s tax system to those of neighboring economies like India, Bangladesh, Vietnam, and Nepal, showing that Pakistan’s system places a heavier burden on salaried individuals.

To address these issues, the Alliance has recommended several measures, including revising tax slabs to align with the cost of living, increasing the medical allowance exemption, introducing commuting-related allowances, and raising the annual exemption threshold to Rs 1,200,000.

The Alliance urged the Finance Minister and the Federal Board of Revenue (FBR) to take these concerns into account when finalising the federal budget for 2025-2026. They expressed hope that these reforms would help alleviate the burden on the salaried class while ensuring sustainable revenue growth for the country.