In a move aimed at easing the financial burden on working families, the federal government has announced a 10% salary increase for all government employees, including civil servants, armed forces personnel, and contract workers. The raise will officially take effect from July 1, 2025.
Alongside the salary bump, the government is also introducing a 30% disparity allowance for employees who weren’t receiving it previously. This step is intended to bring more uniformity to pay structures across various departments and reduce long-standing wage imbalances.
As part of the newly unveiled 2025–26 budget, the government has also made key changes to the income tax structure. Salaried individuals earning up to Rs600,000 annually will now be exempt from income tax — a welcome relief for many in the lower-income bracket.
For those earning above that threshold, tax rates will be applied progressively — starting from 1% and going up to 35% for the highest income group. The aim is to ensure that the tax burden is more fairly distributed, with wealthier individuals contributing a greater share.
These combined measures are designed not just to boost employee morale, but also to support retention in the public sector — particularly during a time when inflation and rising living costs continue to affect households nationwide.
By offering both financial relief and more equitable compensation, the government hopes to build a more supportive and balanced system for public sector workers across the country.
