Finance Division raises the minimum gross salary from Rs37,000 with effect from July 1, 2026, while ministries must absorb the additional cost within existing budgets.
ISLAMABAD: The federal government has increased the minimum wage or gross salary for its civil employees from Rs37,000 to Rs40,700, with the revised threshold taking effect from July 1, 2026.
The Finance Division issued a notification announcing the revision, which will remain effective until further orders.
The increase applies to all civil employees of the federal government as well as civilians paid from defence estimates. The coverage includes contingent-paid staff and contract employees appointed against civil posts in Basic Pay Scales under standard terms and conditions of contract employment.
Employees below Rs40,700 to receive special allowance
Under the notification, employees whose gross salary is below Rs40,700 will receive the difference as a Special Allowance.
The allowance will be subject to income tax and will be admissible during leave and the entire period of Leave Preparatory to Retirement (LPR), except during extraordinary leave.
However, the Special Allowance will not be treated as part of emoluments for calculating pension or gratuity.
It will also not be considered for the recovery of house rent.
Allowance rules for employees posted abroad
The Finance Division said the Special Allowance would not be admissible to employees during their posting or deputation abroad.
Employees returning to Pakistan after completing an overseas posting or deputation, however, will become eligible for the allowance.
On repatriation, the allowance will be paid at the rate and amount that would have been admissible had the employees not been posted abroad.
Ministries to meet additional cost from existing allocations
The government has directed all relevant ministries, divisions and departments to accommodate the additional expenditure arising from the revised minimum wage within their existing budgetary allocations for 2026-27.
The Finance Division clarified that no supplementary grants would be provided for this purpose.
The revision increases the minimum gross salary threshold for eligible federal civil employees by Rs3,700, providing additional income support for employees whose existing gross salaries fall below the newly notified level.
The measure is expected to benefit lower-paid federal civil employees by ensuring that their gross salary reaches the newly established minimum threshold from the start of the 2026-27 financial year.