Introduction: Budget 2025-26 Pakistan – tax reforms:
Good news for Pakistani government workers everywhere! The government has formally authorized a 10% pay raise for all federal employees and a 7% pension hike in the recently passed Federal Budget 2025–26 Pakistan. This is much-needed respite in the face of inflation and growing living expenses.
2025–2026 Salary Increase Announced:
- Federal Cabinet Approval: The Finance Bill for FY2025–2026 highlights a 10% pay increase for all federal employees (Grades 1–22), which the cabinet confirmed during a meeting.
- Pension Hike: A 7% rise for former public servants
- Punjab Government: The provincial budget for Punjab also includes a 10% pay hike and a 5% increase in employee pensions, in line with federal choices.
To lessen the financial burden on public employees, the federal government submitted these adjustments as part of the budget on June 10, 2025, and they will take effect on July 1, 2025.
10% Salary Increase Estimated by Pay Scale (BPS):
| BPS | Basic Salary (Approx.) | 10% Increase (Monthly) | Annual Increase |
|---|---|---|---|
| BPS 1 | Rs 22,000 | Rs 2,200 | Rs 26,400 |
| BPS 5 | Rs 27,000 | Rs 2,700 | Rs 32,400 |
| BPS 7 | Rs 32,000 | Rs 3,200 | Rs 38,400 |
| BPS 9 | Rs 36,000 | Rs 3,600 | Rs 43,200 |
| BPS 11 | Rs 41,000 | Rs 4,100 | Rs 49,200 |
| BPS 14 | Rs 48,000 | Rs 4,800 | Rs 57,600 |
| BPS 16 | Rs 60,000 | Rs 6,000 | Rs 72,000 |
| BPS 17 | Rs 75,000 | Rs 7,500 | Rs 90,000 |
| BPS 18 | Rs 100,000 | Rs 10,000 | Rs 120,000 |
| BPS 19 | Rs 120,000 | Rs 12,000 | Rs 144,000 |
| BPS 20 | Rs 150,000 | Rs 15,000 | Rs 180,000 |
| BPS 21 | Rs 180,000 | Rs 18,000 | Rs 216,000 |
| BPS 22 | Rs 200,000 | Rs 20,000 | Rs 240,000 |
Quick Comparison Table of Salaries and Pensions:
| Category | Amount |
|---|---|
| Salary Increase (Govt. Employees, Grades 1–22) | 10% raise |
| Pension Increase | 7% raise |
| Minimum Wage | Unchanged at Rs 37,000 |
| Punjab Govt Salaries | 10% raise, Pension 5% hike |
Notes:
- This estimate only includes basic pay. Actual salaries vary depending on department, city, and allowances.
- Allowances like house rent, medical, utility, and special pay are not included in this table. These may also rise in future notifications.
- The final salary after increase will be reflected in July 2025 payslips.
Key Highlights – Salary Increase in Budget 2025-26
- Effective From: July 1, 2025
- Applicable To: Federal Government Employees (Grades 1–22)
- Pension Increase: 7% for retired employees
- Budget Size: Rs. 17.57 trillion – approved by the National Assembly
- Focus: Salaried class relief, tax reforms, and social support expansion
The National Assembly has enacted the largest Finance Bill since 2025. Following extensive discussion and clause-by-clause ratification, Finance Minister Muhammad Aurangzeb included the increase he promised. The opposition parties decisively rejected the law when they tried to postpone it for more public deliberation.
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What Is Not Covered:
- The minimum wage: which has not been raised in current budget cycle, is still set at Rs 37,000.
- Private Sector: Only government employees are eligible for these rises; those in the private sector are not.
To lessen the financial burden on public employees, the federal government submitted these adjustments as part of the budget on June 10, 2025, and they will take effect on July 1, 2025.
The Significance of This Salary Increase:
This 10% increase provides vital help to government workers and pensioners in a difficult economic climate when inflation has reduced buying power. This promotion from secretarial workers to senior executives entails:
- More flexibility to cover monthly costs
- An improved capacity to control inflationary pressures
- In the face of economic uncertainty, psychological comfort
Why You Should Know About This:
| Salary Category | Old vs. New (Approx.) |
|---|---|
| Rs 50,000/month (BPS 7) | +Rs 5,000/month |
| Rs 80,000/month (BPS 16) | +Rs 8,000/month |
| Rs 150,000/month (BPS 18+) | +Rs 15,000/month |
| Retired (Rs 40,000 pension) | +Rs 2,800/month |
Note: The numbers are approximations that differ by department, location, and allowance.
Additional Budgetary Choices Affecting Salaried People:
- Updated Tax Slabs: New progressive slabs apply to higher income bands, however employees making up to Rs600,000 per year are still exempt.
- Carbon Levy Introduced: Petroleum prices have been raised to Rs2.50 per liter, which would probably affect energy and transportation expenses.
- Solar Panel Tax Relief: A 10% sales tax applied, but with reduced duties on other solar products.
- Parliamentarians’ Pay Reforms: Now to be decided by the House Committee.
Support for Social Welfare:
PPP Chairman Bilawal Bhutto Zardari affirmed his party’s support for the budget and hailed the government’s announcement of a 20% increase in the Benazir Income Support Programme (BISP) funding.
Final Thoughts:
Although government workers in Pakistan benefit somewhat from the pay rise in the budget for 2025–2026, some workers are still struggling financially because the minimum wage, which is Rs37,000, has not changed. Nonetheless, the government’s action shows an attempt to balance public sector incentive, inflation control, and tax collection.
When they make the formal announcements, keep checking back for the most recent pay scales and precise wage tables!
FAQ’s:
What is the expected increase in salary of government employees for 2025?
The government plans the budget for 2025–2026 to boost employee salaries by 10% and enhance pensions by 7%. This raise is applicable to workers in grades 1 through 22. Officials are also discussing combining ad hoc relief allowances into the base pay, and they suggest a 30% discrepancy allowance for workers in Grades 1 through 16.
What is the minimum wage in Budget 2025-26?
For FY2025-26, the minimum salary would stay at Rs37,000, according to Finance Minister Aurangzeb. Islamabad: Muhammad Aurangzeb, Pakistan’s finance minister, has affirmed that the minimum salary will stay at Rs37,000 per month for the fiscal year 2025–2026.
How much will pension increase in 2025?
The Pakistani government has authorized a 7% rise in pensions for retired government employees for the fiscal year 2025–2026. This increase is included in the federal budget along with a 10% pay rise for government employees from Grade 1 to Grade 22.
What is the annual salary increment in Pakistan?
As per the Government of Pakistan’s Annual Increment Rules:
Every year on December 1st, government workers usually get their yearly raise. Increment Amount: BPS-01 to BPS-16 employees typically see pay increases of about 25%. The increments for BPS-17 to BPS-22 are about 20%.
What is the pension reform in Pakistan 2025?
Finance Minister Muhammad Aurangzeb declared Tuesday that retired public servants returning to government service will now have to choose between their pension and the new salary, thereby ending the practice of dual financial benefits, when he unveiled the budget 2025–26 in the National Assembly.
