ISLAMABAD – A fresh wave of salary relief is set to reach thousands of federal employees, as the government introduces special allowance to ensure a minimum gross monthly pay of Rs40,700.
Under new policy, employees whose gross pay is below Rs40,700 will receive the shortfall through a special allowance, effectively lifting their monthly gross earnings to the new minimum. Ministry of Finance issued an office memorandum defining the scope of the decision, which covers federal civil employees, civilians paid from the defence budget, contingent-paid staff and contractual employees working against civil posts under Basic Pay Scale terms and conditions.
The allowance will be applicable from July 1, 2026, and will remain in place until further orders.
While the move promises relief for lower-paid federal employees, the government has imposed several conditions on the additional payment. The special allowance will be subject to income tax and will continue during ordinary leave and Leave Preparatory to Retirement (LPR). Employees proceeding on extraordinary leave, however, will not receive the allowance during that period.
The additional amount will also not become part of pensionable emoluments. This means the special allowance will not be counted toward future pension or gratuity calculations. It will likewise be excluded from the calculation of house rent recovery.
Federal employees serving abroad or on deputation will not be entitled to the allowance while they remain on such assignments. However, the benefit will be restored once employees complete their foreign posting or deputation and return to Pakistan. They will then receive the allowance at the same rate and amount they would have been entitled to had they remained in Pakistan.
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