The Federation of Pakistan Chambers of Commerce and Industry has proposed significant FPCCI tax relief measures for salaried individuals in the upcoming Budget 2026-27, aiming to ease the financial burden on employees and stimulate broader economic activity in Pakistan.
The proposals were submitted to the Ministry of Finance as part of pre-budget recommendations and include major adjustments in income tax rates, exemption thresholds, and surcharge policies affecting salaried taxpayers across the country.
According to the recommendations, the FPCCI has urged the government to reduce income tax rates for the salaried class by up to five percent. If approved, the maximum tax rate would come down from 35 percent to 30 percent, offering direct relief to middle and upper-middle-income earners.
The business body has also called for the abolition of the nine percent surcharge currently imposed on salaried individuals. It argues that removing this additional burden would improve disposable income and strengthen household purchasing power.
Another key proposal includes increasing the annual tax-free income threshold from Rs600,000 to Rs1.2 million. FPCCI officials believe this step would protect low-income earners from inflation-driven financial pressure and bring more fairness into the taxation system.
Key proposals for the salaried class
The FPCCI tax relief package also highlights structural reforms beyond salaried individuals. The organization has proposed reducing income tax rates for manufacturers from 29 percent to 20 percent, aiming to encourage industrial growth and job creation.
It further recommended restoring the Final Tax Regime for exporters of goods and maintaining a stable tax policy for the IT sector until 2035. The body believes that long-term consistency will help Pakistan expand IT exports from $3.8 billion to $10 billion.
FPCCI proposed raising the SME turnover limit from Rs250 million to Rs500 million and linking it to inflation. This, it said, would allow businesses to grow without immediate tax pressure.
The proposal also includes calls for the complete abolition of the super tax. FPCCI argues that the tax discourages investment and reduces competitiveness in both domestic and international markets.
FPCCI President Atif Ikram Sheikh stated that Pakistan’s economy has stabilized compared to previous years. He credited policy efforts and improved governance for restoring investor confidence. He added that economic stability must now translate into real relief for taxpayers and businesses.
The organization also highlighted Pakistan’s growing diplomatic and economic engagement. It emphasized that improved international relations and stability should now be leveraged to attract foreign investment and boost exports.
While the proposals are not yet government policy, they are expected to influence budget discussions for 2026-27. Economists say the recommendations reflect growing pressure to balance fiscal consolidation with public relief.
If approved, the changes could reshape Pakistan’s tax system, especially for salaried people facing rising inflation and living costs.
As budget talks continue, attention turns to the Finance Ministry and its final decisions.
