Islamabad, June 21, 2025 — In a move aimed at providing relief to salaried individuals, the Senate of Pakistan has recommended increasing the tax exemption threshold on salary income from the existing Rs600,000 to Rs1.2 million per annum.
The recommendation was submitted to the National Assembly following detailed deliberations on the Finance Bill, 2025.
As the upper house of the Parliament, the Senate holds an advisory role on money bills. Its input on the Finance Bill carries political and economic weight, especially when it comes to direct taxation affecting the middle class. The Senate’s proposal calls for complete exemption of salary income up to Rs1.2 million, a move that could ease financial pressures on millions of employees across the country.
Currently, the Finance Bill, 2025 proposes a 1% tax on salary income between Rs600,000 and Rs1.2 million—down from 5% last year. However, the Senate has urged the government to go further by fully exempting this bracket from income tax altogether.
The Senate has also proposed sweeping revisions to other salary tax slabs for the fiscal year 2025–26. For the income bracket between Rs1.2 million and Rs2.2 million, the government had suggested a tax of Rs6,000 plus 11%. The Senate, however, recommended drastically lowering it to Rs6,000 plus just 1%.
Similarly, for those earning between Rs2.2 million and Rs3.2 million, the Finance Bill proposed a rate of Rs116,000 plus 23%, down from Rs180,000 plus 25% in the previous year. The Senate has recommended a reduced rate of Rs116,000 plus 2%.
For the Rs3.2 million to Rs4.1 million income slab, the tax was earlier set at Rs430,000 plus 30%. The Finance Bill suggested a reduction to Rs346,000 plus 5%, and the Senate agreed with this revised figure.
Finally, for salary income above Rs4.1 million, the Senate has proposed a more generous cut. While the Finance Bill suggests Rs616,000 plus 35%, the Senate recommends reducing the rate further to Rs616,000 plus 10%.
These proposals reflect the Senate’s focus on tax relief for the salaried class, aiming to make taxation more equitable and less burdensome in the upcoming fiscal year.