In a bid to ease the financial strain on the salaried class, the federal government is gearing up to announce inflation-adjusted salary relief for government employees in the upcoming Budget 2025-26.

Sources familiar with the matter revealed that salaries and allowances are expected to increase in line with current inflation rates—an effort to support public sector workers amid rising costs.

Government employees have long been pressing for a substantial hike in their earnings, with many demanding a minimum salary of Rs50,000 per month. As tensions rise, several unions have announced a protest sit-in outside Parliament House on June 10—the day the federal budget is likely to be unveiled—if their demands are not met.

Push for digital economy: Crackdown on cash transactions

In a parallel move, the government is set to introduce major fiscal reforms targeting cash-based transactions. These reforms aim to reduce tax evasion and curb fuel adulteration, while simultaneously promoting digital payments across the country.

One of the key proposals under review is a Rs3 additional charge on fuel purchases made in cash at petrol stations. The logic behind this measure is to incentivize digital payment methods such as debit/credit cards, QR codes, and mobile wallets. Customers can still pay in cash but will have to bear the added cost.

Manufacturers and importers may also be allowed to impose a 2% surcharge on cash sales, and further levies are being considered for cash purchases at Tier-1 retail outlets. Interestingly, restaurants will be exempt from this additional taxation if customers opt to pay digitally.

The broader message is clear: the government is nudging the public toward a cashless economy, where transparency and traceability are key.

No tax net expansion for certain professions

Contrary to earlier expectations, the new budget does not include any fresh proposals to bring professionals such as doctors, lawyers, jewelers, wedding hall owners, and event managers into the formal tax net. This decision may raise eyebrows, especially among those advocating for broader tax base reforms.

Higher taxes for non-filers, car buyers

The budget is also expected to hit non-filers harder. The withholding tax on cash withdrawals for non-filers is likely to increase from 0.6% to 1.2%. In addition, a new tax slab could be introduced for daily cash withdrawals exceeding Rs50,000—another step toward pushing people toward digital transactions.

Another potential shocker for consumers: the General Sales Tax (GST) on locally manufactured vehicles with engine capacities under 800cc may jump from 12.5% to 18%. This segment, once seen as affordable for average buyers, may no longer be within easy reach.