Karachi, April 10, 2025 – Pakistan’s salaried class has made an urgent appeal to the federal government to ease the growing tax burden in the upcoming Budget 2025–26, highlighting the financial pressures faced by wage earners amid high inflation and stagnant salaries.
The Salaried Class Alliance Pakistan, in its official proposals, has demanded an increase in the annual tax exemption limit from the current Rs600,000 to Rs1.2 million.
“Salaried individuals are being disproportionately burdened compared to other segments of society. With rising living costs, it is increasingly difficult for the salaried class to sustain a decent quality of life,” the Alliance stated. They emphasized the need for tax reforms that align with economic realities and global best practices.
The group has also requested reinstatement of tax incentives on investments in mutual funds, shares, and insurance policies, which were previously available but removed through earlier finance acts. Additionally, the salaried class seeks removal of the 10% additional surcharge imposed on those in formal employment sectors.
Between 2019 and 2025, the government’s tax collection from the salaried class has surged from Rs76 billion to an estimated Rs570 billion. “While revenue growth is essential, this significant rise has fallen heavily on the shoulders of the salaried class, which already operates in a transparent and compliant framework,” said the Alliance.
Among the key proposals is a revision of tax slabs to reflect inflation and a request to restore medical allowance exemption from 10% to 25%, in line with escalating healthcare expenses. The Alliance also proposed introducing deductible allowances for commuting, suggesting a 15% allowance to offset work-related travel costs.
The Alliance criticized the removal of key tax credits through the Finance Act 2022 and Finance Act 2024, calling them regressive steps that have eroded the financial stability of the salaried class. These changes, combined with rising taxes and the loss of deductible benefits, have prompted many professionals to seek employment opportunities abroad.
A comparison with neighboring countries like India, Bangladesh, Vietnam, and Nepal showed significantly higher tax exemptions and deductible allowances for salaried employees, further underscoring the inequity of Pakistan’s current tax regime.
The salaried class concluded by urging the government to widen the tax net and bring the undocumented sector into the fold, ensuring fairer taxation and long-term fiscal sustainability.