Budget 2026-27: Govt cuts taxes, ends surcharge for four salaried class income slabs

Says announcing these measures under the prime minister's directives

Finance Minister Muhammad Aurangzeb on Friday unveiled tax relief measures for four income slabs of salaried employees and announced the removal of the surcharge, following directives from Prime Minister Shehbaz Sharif, while presenting the 2026–27 Federal Budget in the National Assembly.

Speaking in the National Assembly, Aurangzeb said, “I am pleased to announce that under the prime minister’s guidance, our government will reduce tax rates for different income groups to ease the burden on employees.”

According to the proposal, salaried individuals earning Rs2.2-3.2 million annually will see their tax rate reduced from 23% to 20%.

Those with an income between Rs3.2-4.1m will have their tax rate cut from 30% to 25%.

Employees earning Rs4.1-5.6m annually will face a reduced tax rate of 29%, down from 35%.

Meanwhile, salaried individuals with incomes between Rs5.6-7m will see their tax rate lowered from 35% to 32%.

Aurangzeb said that the surcharge on the salaried class would also be abolished, a long-standing demand.

"Last year, the surcharge had been reduced from 10% to 9%, but the proposal now is for a complete removal," he added.

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While presenting the budget, Aurangzeb said that the budget was being presented at a time when Pakistan, in the eyes of its people and the world, had achieved the status of a country whose voice was heard and whose friendship was desired.

He said Pakistan has responded forcefully to India's aggression. India was compelled to discuss peace. Our Operation Bunyanum Marsoos was a major success.

Pakistan has achieved a massive diplomatic success in recent months and successfully brought the United States and Iran to the negotiating table to resolve regional conflict, he added.