KARACHI, May 27, 2025 — In a bold and potentially game-changing proposal ahead of the 2025-26 federal budget, the Institute of Chartered Accountants of Pakistan (ICAP) has roared into the spotlight by demanding immediate and sweeping relief for Pakistan’s long-suffering salaried class.
ICAP is urging the government to exempt salary income from taxation in direct proportion to inflation over the last two years—a move that could redefine income tax policy in Pakistan.
As inflation has skyrocketed, burning holes in the wallets of the working class, the ICAP says it’s high time the government acknowledged the real economic struggle faced by millions. The current minimum taxable salary threshold of Rs. 600,000 per annum has remained frozen for two years—even as double-digit inflation relentlessly devours purchasing power. With salaries stagnating and costs of essentials like housing, utilities, and education soaring, salaried individuals are being crushed under an unfair tax regime, ICAP warns.
“ICAP strongly recommends that the threshold for salary tax exemption be raised to Rs. 1,200,000,” reads the institute’s explosive budget proposal. “This adjustment is not just a fiscal necessity—it is a moral imperative.”
This dramatic revision, ICAP asserts, is essential to protect middle- and lower-income earners from being unfairly dragged into the tax net simply for trying to survive. With no avenues for tax planning and rigid fixed incomes, salaried workers are currently bearing a disproportionate burden in Pakistan’s fiscal equation.
In its five-pronged argument, ICAP highlights that adjusting the salary tax exemption and revising outdated slab rates will:
• Promote fairness and equality in the taxation system,
• Safeguard the real income of wage earners,
• Prevent a decline in consumption,
• Boost economic confidence among taxpayers, and
• Encourage greater voluntary tax compliance.
ICAP’s fiery advocacy for salary relief is expected to ignite major debate in policy circles, as pressure mounts on the government to offer genuine economic relief. If adopted, ICAP’s proposal could mark a turning point for Pakistan’s salaried class—transforming fiscal pain into long-overdue justice.