ISLAMABAD: Pakistan’s federal government has raised the minimum gross monthly salary for government employees from Rs37,000 to Rs40,700, the Finance Ministry said.
The revised minimum salary will take effect from July 1, 2026.
Employees whose gross monthly salary falls below Rs40,700 will receive the difference as a special allowance, according to an office memorandum issued by the Finance Ministry.
The measure covers all civilian employees of the federal government. It also applies to civilian employees paid from the defence budget, including contingent-paid staff.
The policy further covers contractual employees appointed against civil posts under the prescribed terms and conditions of the basic pay scales.
Under the new arrangement, eligible employees will receive the special allowance from July 1 until further orders.
However, the allowance will remain subject to income tax. Employees will also receive it during ordinary leave and leave preparatory to retirement, known as LPR.
The government will not pay the allowance during extraordinary leave.
Moreover, the special allowance will not count as a pensionable emolument. It will therefore not form part of calculations for pension or gratuity.
The government will also exclude the allowance when calculating house-rent recovery.
In addition, employees posted abroad or serving on deputation outside Pakistan will not qualify for the special allowance.
However, employees returning to Pakistan after completing their foreign posting or deputation will receive the allowance at the same rate and amount they would have received had they remained in Pakistan.
The Finance Ministry said the increase would create additional financial costs for ministries, divisions and departments.
For the 2026-27 financial year, the relevant institutions must meet the additional costs from their existing budget allocations.
The Finance Ministry said it would not provide any supplementary grants for the purpose.
As a result, the government has effectively set Rs40,700 as the minimum gross monthly salary for eligible federal employees. However, it will pay the increase as a special allowance rather than as a pensionable component of salary.
