The federal government is considering a targeted tax relief package for salaried individuals in the upcoming Budget 2026-27, as the International Monetary Fund (IMF) has reportedly opposed broader tax reductions for businesses and other sectors.
According to media reports, the IMF has resisted wide-ranging tax concessions, significantly limiting the government’s fiscal space and narrowing the scope of potential relief measures. As a result, the proposed tax relief is expected to focus primarily on the salaried class.
The Federal Board of Revenue (FBR) has submitted a set of tax relief proposals to Prime Minister Shehbaz Sharif for review. Following the prime minister’s consideration, the Ministry of Finance is expected to engage with the IMF to secure approval before the federal budget is presented.
Among the key proposals under discussion are reductions in income tax rates for salaried individuals earning between Rs200,000 and Rs300,000 per month. This income bracket is estimated to include around 550,000 taxpayers and has been among the most heavily taxed segments in recent years.
The government is also examining possible adjustments to higher salary slabs, including revisions to tax thresholds and rates applicable to high-income earners.
In addition to salaried tax relief, policymakers are reviewing potential changes to corporate taxation, super tax rates and the 15 percent withholding tax on dividend income. However, these measures remain subject to ongoing negotiations with the IMF.
Officials familiar with the discussions said that any final tax relief package will depend on the outcome of talks between Pakistan and the IMF in the coming days.
The development comes as the government prepares the Federal Budget 2026-27 amid pressure to boost revenue collection while providing relief to taxpayers affected by inflation and rising living costs.
A final decision on proposed income tax reductions and other fiscal measures is expected before the budget announcement scheduled for next week.
