ISLAMABAD: Federal employees whose gross monthly salary is below Rs40,700 will receive a special allowance to cover the shortfall, with the payment effective from July 1, 2026, the Finance Ministry has announced.
The allowance will make up the difference between an employee’s existing gross salary and the new minimum threshold of Rs40,700. It will be paid until further orders.
According to an office memorandum issued by the Ministry of Finance, the measure applies to federal civil employees, civilians paid from defence estimates, contingent-paid staff and contract employees appointed against civil posts in the Basic Pay Scales on standard terms and conditions.
The special allowance will be subject to income tax and will remain admissible during ordinary leave and the entire period of leave preparatory to retirement (LPR). However, it will not be payable during extraordinary leave.
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The ministry clarified that the allowance will not form part of emoluments for calculating pension or gratuity and will not be taken into account for house rent recovery.
Federal employees serving abroad or on deputation will not be entitled to the allowance during that period. They will become eligible again after completing their foreign posting or deputation and returning to Pakistan, at the same rate and amount that would have been admissible had they remained in the country.
The Finance Ministry has directed ministries, divisions and departments to meet the additional expenditure from within their existing budgetary allocations for 2026-27. No supplementary grants will be provided for this purpose.
