Budget 2026-27: what was announced
Finance Minister Muhammad Aurangzeb presented the federal budget on 12 June 2026. It gave a 7% increase in salaries of federal government employees and a 7% increase in pensions, effective 1 July 2026, together with lower income tax rates for annual salaries between Rs 2.2 million and Rs 7 million. The minimum wage was raised by 10% to Rs 40,700 a month for the federal capital.
Provinces announce their own packages. Punjab's budget (16 June 2026) proposed a 7% salary increase and a 3.5% pension increase. Sindh announced 7% for both salaries and pensions. Enter the rate that applies to you in the calculator.
How the increase is applied
Budget increases for serving employees are calculated on basic pay (running or revised basic, as notified), not on the full gross. Allowances such as house rent, conveyance and medical change only if the notification says so. That is why the calculator asks for basic pay and allowances separately:
Increase = basic pay × rate · New gross = basic + allowances + increase
When previous ad hoc relief allowances are merged into basic pay, the new basic is higher, so later percentage increases, annual increments and pension are all worked out on a larger base. If your department has issued revised basic pay figures, enter those.
Increase by grade (illustrative)
| Level | Example basic pay | Monthly increase (7%) | Per year |
|---|---|---|---|
| Junior (approx. BPS 1–7) | Rs 40,000 | Rs 2,800 | Rs 33,600 |
| Clerical (approx. BPS 11–14) | Rs 65,000 | Rs 4,550 | Rs 54,600 |
| Officer (approx. BPS 16–17) | Rs 110,000 | Rs 7,700 | Rs 92,400 |
| Senior officer (approx. BPS 18–19) | Rs 180,000 | Rs 12,600 | Rs 151,200 |
| Senior management (BPS 20+) | Rs 300,000 | Rs 21,000 | Rs 252,000 |
Basic pay within each BPS depends on your stage (number of annual increments earned), so these are examples rather than official scale values.
Arrears
When the revised pay is processed late, the difference from 1 July is paid as arrears. The calculator multiplies the monthly increase by the months you enter. Arrears are taxable as salary in the month paid.
Take-home after tax
The calculator shows take-home before and after the increase using the FY 2026-27 salaried slabs. Lower tax rates in the middle slabs mean many officers in grades 17 and above see a larger rise in net pay than the 7% headline. GP fund subscription, benevolent fund and group insurance deductions are not included.
Pensioners
The pension increase is applied to net pension (after commutation). To recalculate commutation or estimate a new pension at retirement, use the pension & commutation calculator. Our article on the government salary increase 2026-27 explains the full package.
Frequently asked questions
How much did government salaries increase in 2026-27?
Federal employees received a 7% increase from 1 July 2026. Provinces announced their own rates; Punjab and Sindh also announced 7% for salaries.
Is the increase on basic pay or gross salary?
It is calculated on basic pay as notified by the Finance Division or provincial finance department.
How much did pensions increase in budget 2026-27?
Federal pensions increased by 7%. Punjab announced 3.5% and Sindh 7%.
When will arrears be paid?
Arrears from 1 July are paid once the revised pay is processed by AGPR / AG offices, usually within the first few months of the fiscal year.
Is the increase taxable?
Yes, it is part of salary. The calculator shows take-home after FY 2026-27 income tax.