FPCCI advocates massive tax relief for salaried persons in budget 2026-27
The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has called for broad tax relief for salaried individuals in the federal budget 2026-27, arguing that high tax rates and surcharges are eroding disposable incomes and weakening household financial stability.
In its budget proposals, the FPCCI said salaried individuals are currently subject to income tax rates of up to 35% along with a 9% surcharge, leaving limited take-home income to cover essential expenses such as education, healthcare and household needs.
The business body said the existing tax structure is placing undue pressure on middle-income earners at a time when inflation and living costs remain elevated.
Proposed tax relief measures
The FPCCI recommended several key reforms for salaried taxpayers, including:
• Reduction of the maximum income tax rate from 35% to 30%
• Reduction or abolition of the 9% surcharge
• Increase in the non-taxable income threshold from PKR 600,000 to PKR 1,200,000
• Introduction of tax credits for education and healthcare expenditures to support human capital development and encourage greater tax compliance
The proposals were backed by multiple stakeholders, including the Jhelum Chamber of Commerce, Faisalabad Chamber of Commerce and Industry, Quetta Chamber of Commerce, stock brokers, large steel producers, and FPCCI advisory and research bodies.
Broader tax concerns for non-salaried sectors
The FPCCI also highlighted concerns regarding non-salaried individuals and Association of Persons (AoPs), stating that they are subject to income tax rates of up to 45% along with a 10% surcharge.
It argued that after-tax income for these segments remains insufficient to encourage business expansion, investment in education, and improved healthcare spending.
Recommendations for non-salaried taxpayers
For non-salaried individuals and AoPs, the FPCCI proposed:
• Reduction of income tax rates from 45% to 35%
• Reduction or abolition of the 10% surcharge
• Increase in the non-taxable income threshold from PKR 600,000 to PKR 1,200,000
• Introduction of tax credits for education and healthcare spending to promote compliance and improve social outcomes
The chamber said the reforms would help stimulate economic activity, improve tax compliance, and ease financial pressure on households while supporting long-term human capital development.