Tax Relief for Salaried Class, But Pensioners at Risk

As part of its 2025–26 fiscal proposals, the government is preparing a tax package that aims to ease pressure on the salaried class while considering new measures that may affect pensioners.

One key proposal includes raising the monthly tax-exempt income limit from Rs. 50,000 to Rs. 80,000, making annual incomes up to Rs. 960,000 tax-free. This move is expected to benefit middle-income earners struggling with inflation.

However, concerns are growing over a controversial plan to impose a 5 percent income tax on pensioners, triggering alarm among retirees and union groups. Critics argue that taxing pensions could place an undue burden on vulnerable citizens who rely on fixed incomes.

In contrast, the government may eliminate the 10 percent surcharge currently applied to high-net-worth individuals earning over Rs. 10 million monthly, potentially offering relief to the country’s wealthiest taxpayers.

These reforms are part of broader discussions aimed at achieving fiscal balance. With the national budget due on June 2 and IMF negotiations beginning soon, officials are under pressure to present credible, balanced, and sustainable reforms that serve both revenue goals and social fairness.