On this page 9 sections
- Salary Increase 2026-27 at a Glance
- The Two Layers of the Increase
- How Much Each Grade Gets in Pakistan: ARA-2026
- Disparity Reduction Allowance (DRA) 2026
- Conveyance Allowance: 50% Increase
- What Did Not Change
- Provincial Employees: Different Rates
- How to Check Your New Salary in Pakistan
- Frequently Asked Questions
Federal government employees got a salary increase in Budget 2026-27, but the headline figure of 7% is only part of it. The budget also merged two old allowances into basic pay, which raised basic pay itself by about 20%, and raised the conveyance allowance by 50%.
Here is the full package: the 7% ad-hoc relief allowance, the pay scale merger, the disparity reduction allowance, the conveyance increase, and worked examples by BPS grade. It covers federal government employees in BPS-1 to BPS-22. Provincial employees follow their own provincial budgets, which set their own rates.
Salary Increase 2026-27 at a Glance#
| Component | Increase | Who gets it |
|---|---|---|
| Basic pay merger (RBPS-2026) | About 20% on basic pay | All federal employees, BPS-1 to 22 |
| ARA-2026 | 7% of new basic pay | All federal employees, BPS-1 to 22 |
| DRA-2026 | 15% | Only employees already receiving DRA |
| Conveyance allowance | 50% increase | All federal employees |
| Minimum wage | 10% to Rs 40,700/month | Lowest-paid workers |
| Pension | 7% increase | Federal pensioners |
All changes are effective from 1 July 2026. The package was announced in Budget 2026-27, presented by Finance Minister Muhammad Aurangzeb in the National Assembly on 12 June 2026, after the federal cabinet approved a 7% salary and pension increase.
The Two Layers of the Increase#
Layer 1: the basic pay merger. The Ad-hoc Relief Allowances from 2022 (15%) and 2025 (10%) were merged into basic pay to create the Revised Basic Pay Scales 2026 (RBPS-2026). This raised basic pay itself by about 20%. It is the first such merger since 2022, and it matters because basic pay is the base for pension, increments and most allowances.
Layer 2: a fresh 7% ARA-2026. A new Ad-hoc Relief Allowance of 7% is paid on the new, higher basic pay, not on the old pre-merger figure. Every federal employee in BPS-1 to BPS-22 gets it.
The increase is not 25%. Adding the 15% and 10% allowances together to claim a 25% rise is wrong. The merger is about 20% net, because the two allowances used different base matrices. Our BPS pay scale chart 2026 gives the new minimum and maximum basic pay for every scale.
How Much Each Grade Gets in Pakistan: ARA-2026#
| BPS grade | New basic pay (minimum) | ARA-2026 (7%) per month | Conveyance increase per month |
|---|---|---|---|
| BPS-1 | Rs 16,280 | Rs 1,140 | + Rs 893 |
| BPS-11 | Rs 22,410 | Rs 1,569 | + Rs 1,428 |
| BPS-14 | Rs 27,060 | Rs 1,894 | + Rs 1,428 |
| BPS-17 | Rs 54,140 | Rs 3,790 | + Rs 2,500 |
Example: BPS-11 at the minimum basic pay of Rs 22,410. ARA-2026 is 7% of Rs 22,410 = Rs 1,569 a month. The conveyance allowance rises from Rs 2,856 to Rs 4,284, an extra Rs 1,428 a month. Together, Rs 2,997 a month before the basic pay merger itself, which adds about 20% to the basic pay.
Example: BPS-17 at the minimum basic pay of Rs 54,140. ARA-2026 is Rs 3,790 a month. The conveyance allowance rises from Rs 5,000 to Rs 7,500, an extra Rs 2,500 a month. Together, Rs 6,290 a month before the basic pay merger.
Example: BPS-1 at the minimum basic pay of Rs 16,280. ARA-2026 is Rs 1,140 a month. The conveyance allowance rises from Rs 1,785 to Rs 2,678, an extra Rs 893 a month.
Your actual increase depends on your stage, not just your grade. The figures above use the minimum basic pay of each scale. An employee higher up the scale, with a higher basic pay, gets a larger ARA-2026 in rupees, because it is 7% of running basic pay.
Disparity Reduction Allowance (DRA) 2026#
DRA-2026 is 15%, but only for employees already receiving DRA. It is not a new allowance for everyone. If you were already in receipt of the Disparity Reduction Allowance, you get the 2026 rate on top.
DRA-2026 is 15% of the basic pay as on 30 June 2022. That is the official figure in Finance Division O.M. No.14(2)R-3/2025 dated 21 July 2026. The 2017 scale was the base for DRA-2022, not for DRA-2026. For employees appointed on or after 1 July 2022, the allowance is worked out on the 2017 scale, per the DRA-2025 memorandum.
Conveyance Allowance: 50% Increase#
The conveyance allowance rose 50% from 1 July 2026. BPS 1-4 went from Rs 1,785 to Rs 2,678 a month. BPS 5-10 went from Rs 1,932 to Rs 2,898. BPS 11-15 went from Rs 2,856 to Rs 4,284. BPS 16 and above went from Rs 5,000 to Rs 7,500.
Conveyance allowance received in cash is fully taxable. It is not exempt under the Income Tax Ordinance, 2001. Our income tax on salary guide explains which allowances are taxed and how the 2026-27 slabs work.
What Did Not Change#
ARA-2023 and ARA-2024 were NOT merged into basic pay. They stay as separate allowances, frozen at their 30 June 2026 level. ARA-2024 is 25% of the BPS-2022 basic pay for BPS 1-16 and 20% for BPS 17-22.
Your pension base improved. Because ARA-2022 and ARA-2025 are now part of basic pay, they count towards your pensionable emoluments. Our government pension guide explains how the pension is worked out on the average of the last 24 months.
The 9% tax surcharge was abolished for salary income. The Finance Act 2026 removed it, so the tax on salary is lower than it would otherwise have been. The salaried slabs themselves start at 0% up to Rs 600,000 a year.
Provincial Employees: Different Rates#
The 7% figure is federal. Each province announces its own salary increase in its own budget. Punjab’s pension increase, for example, is 3.5%, not 7%. Do not apply the federal rates to a provincial salary slip without checking your provincial notification.
Sindh and Balochistan notified the same 50% conveyance increase as the federal government, effective 1 July 2026. Punjab and Khyber Pakhtunkhwa issue their own notifications.
How to Check Your New Salary in Pakistan#
Check your July 2026 salary slip. The new basic pay, ARA-2026, DRA-2026 and conveyance allowance should all appear as separate lines. Our AGPR salary slip guide explains how to download your slip from the PIFRA portal or get it by email.
Work it out yourself in three steps:
- Find your new basic pay on the RBPS-2026 scale.
- Take 7% of it for ARA-2026.
- Add the conveyance increase for your BPS band, and DRA-2026 at 15% if you already receive DRA.
The total is your monthly increase before tax.
If the figures on your slip do not match, ask your Drawing and Disbursing Officer or your AGPR office. The official rules are on the Finance Division website.
Frequently Asked Questions#
How much is the salary increase in the 2026-27 budget?
For federal employees, two things: the basic pay itself rose about 20% because ARA-2022 (15%) and ARA-2025 (10%) were merged into it, and a fresh ARA-2026 of 7% is paid on the new basic pay. On top of that, the conveyance allowance rose 50% and DRA-2026 of 15% applies to employees already receiving DRA. A BPS-11 at minimum basic pay gets Rs 1,569 a month in ARA-2026 plus Rs 1,428 in conveyance, before the basic pay merger.
Is the salary increase 7% or 25%?
Neither figure alone is the whole story. The 7% is the new ARA-2026. The merger of the two old allowances raised basic pay by about 20%, not 25%, because the two allowances used different base matrices. The total increase in take-home pay is roughly 12 to 18%, depending on your grade, stage and whether you receive DRA.
When does the salary increase apply from?
1 July 2026. All the Budget 2026-27 relief measures are effective from that date, so they appear on the July 2026 salary slip. The budget was presented on 12 June 2026 and the Finance Division notification followed in July 2026.
Do provincial employees get the same increase?
No. The 7% ARA and the RBPS-2026 merger are federal. Each province announces its own rates in its own budget. Punjab’s pension increase, for example, is 3.5%. Sindh and Balochistan notified the same 50% conveyance increase as the federal government. Check your provincial notification for your own rates.
Does the salary increase affect my pension?
Yes, for the better. Because ARA-2022 and ARA-2025 are now part of basic pay, they count towards your pensionable emoluments, which raises the pension worked out on the average of the last 24 months. Federal pensioners also got a separate 7% pension increase from the July 2026 payment.
