Salaried class tax relief narrows as IMF pushes back against broader cuts, leaving the government with limited room ahead of the June 10 budget

Pakistan’s planned tax relief is shrinking fast. The IMF pushed back against wide-ranging tax reductions. That pressure forced the government to focus almost entirely on salaried workers. The salaried class tax relief package is now significantly narrower than originally envisioned. Moreover, the FBR has forwarded proposals to the Prime Minister for review. The Finance Ministry will then engage the IMF for approval before June 10.

The proposals target salaried individuals earning between Rs. 200,000 and Rs. 300,000 per month. That bracket covers roughly 550,000 taxpayers. Furthermore, the government is considering reduced income tax rates specifically for this group. Therefore, middle-income salaried workers stand to gain the most from whatever relief survives IMF scrutiny.

Higher salary slabs are also under review. The government is considering revisions to tax thresholds and rates for top earners. Furthermore, possible changes to corporate taxation, super tax rates, and the 15 percent dividend withholding tax are also on the table. Therefore, some adjustments beyond the salaried class may still make it into the final budget.

The IMF’s resistance reflects its push for revenue expansion rather than contraction. Pakistan’s programme commitments leave limited fiscal space for broad cuts. Therefore, the government must deliver meaningful relief within tight boundaries set by its international lender. That is not an easy task.

Final decisions depend on how negotiations conclude before June 10. Still, with the IMF firmly in the room, expectations of sweeping relief should stay modest. Finally, for Pakistan’s 550,000 mid-tier salaried taxpayers, any reduction in their monthly tax bill would be a genuine win — however small the overall package turns out to be.