The increase in salary in Budget 2026 is now confirmed for government employees. The Federal Government has introduced Basic Pay Scales 2026 and granted a 7% Ad-hoc Relief Allowance 2026 on running basic pay under BPS-2026. These changes are effective from 1 July 2026.
For Punjab government employees, the Punjab Budget 2026-27 also announced a 7% salary increase. So if you were still seeing old reports about a possible 5%, 10% or another expected increase, those figures should no longer be treated as current.
One thing matters here: a 7% relief allowance does not simply mean that every employee’s total gross salary goes up by exactly 7%. Basic pay scales were also revised, some previous relief allowances were merged into BPS-2026, and conveyance allowance was increased separately.
| Salary Update 2026-27 | Confirmed Detail |
|---|---|
| Federal Ad-hoc Relief Allowance | 7% |
| Calculation Basis | Running basic pay under BPS-2026 |
| New Pay Scales | BPS-2026 |
| Effective Date | 1 July 2026 |
| Conveyance Allowance | 50% increase |
| Federal DRA-2026 | 15% for already eligible employees |
| Punjab Salary Increase | 7% |
| Punjab Pension Increase | 3.5% |
| Last Verified | 15 September 2026 |
View Official BPS-2026 Notification
How Much Did Government Salaries Increase in Budget 2026?
For federal government civil employees covered by the Finance Division notification, the confirmed Ad-hoc Relief Allowance 2026 is 7% of running basic pay in BPS-2026.
The Finance Division issued the formal Office Memorandum on 21 July 2026, but the revised pay scales and allowance apply with effect from 1 July 2026. The notification covers federal civil employees paid from civil and defence estimates according to its stated terms.
Another major change is that the government introduced Basic Pay Scales 2026, replacing BPS-2022. The new scales were created by merging:
- Ad-hoc Relief Allowance 2022
- Ad-hoc Relief Allowance 2025
These two allowances therefore cease to remain separate after their incorporation into BPS-2026. Employees’ existing pay is fixed in the new scales according to the rules given in the official notification.
This is why simply taking an old gross salary and adding 7% can give the wrong answer. The correct starting point for federal employees is their revised running basic pay under BPS-2026.
Revised Basic Pay Scales 2026 Chart
The Finance Division has published the official minimum pay, annual increment and maximum pay for BPS 1 to BPS 22.
| BPS | Minimum Pay 2026 | Annual Increment | Maximum Pay |
|---|---|---|---|
| 1 | Rs. 16,280 | Rs. 520 | Rs. 31,880 |
| 2 | Rs. 16,600 | Rs. 590 | Rs. 34,300 |
| 3 | Rs. 17,130 | Rs. 700 | Rs. 38,130 |
| 4 | Rs. 17,650 | Rs. 800 | Rs. 41,650 |
| 5 | Rs. 18,300 | Rs. 910 | Rs. 45,600 |
| 6 | Rs. 18,930 | Rs. 1,010 | Rs. 49,230 |
| 7 | Rs. 19,590 | Rs. 1,100 | Rs. 52,590 |
| 8 | Rs. 20,290 | Rs. 1,210 | Rs. 56,590 |
| 9 | Rs. 20,990 | Rs. 1,310 | Rs. 60,290 |
| 10 | Rs. 21,680 | Rs. 1,430 | Rs. 64,580 |
| 11 | Rs. 22,410 | Rs. 1,580 | Rs. 69,810 |
| 12 | Rs. 23,750 | Rs. 1,720 | Rs. 75,350 |
| 13 | Rs. 25,420 | Rs. 1,880 | Rs. 81,820 |
| 14 | Rs. 27,060 | Rs. 2,090 | Rs. 89,760 |
| 15 | Rs. 28,730 | Rs. 2,380 | Rs. 100,130 |
| 16 | Rs. 33,720 | Rs. 2,720 | Rs. 115,320 |
| 17 | Rs. 54,140 | Rs. 4,110 | Rs. 136,340 |
| 18 | Rs. 68,330 | Rs. 5,120 | Rs. 170,730 |
| 19 | Rs. 105,510 | Rs. 5,450 | Rs. 214,510 |
| 20 | Rs. 123,090 | Rs. 8,040 | Rs. 235,650 |
| 21 | Rs. 136,680 | Rs. 8,920 | Rs. 261,560 |
| 22 | Rs. 146,770 | Rs. 10,470 | Rs. 293,350 |
These are the official BPS-2026 scale limits, not the exact basic salary that every employee in a grade will receive. An employee already serving before the revision may be placed at a higher stage within the relevant scale according to pay-fixation rules.
For example, the minimum basic pay of BPS-16 is Rs.33,720, but this does not mean every BPS-16 employee will now have Rs.33,720 as basic pay. Someone with years of service can be at a higher stage of the scale.
What Changed Besides the 7% Relief?
The salary package for 2026-27 is bigger than one 7% allowance. Three changes are particularly useful for employees to understand.
ARA-2022 and ARA-2025 Merged into BPS-2026
The Federal Government created BPS-2026 by incorporating the Ad-hoc Relief Allowances granted in 2022 and 2025.
The 2022 allowance had been 15% on the relevant earlier basic-pay basis, while ARA-2025 was 10% of running basic pay under BPS-2022. Following the introduction of the new scales, those two allowances cease separately from 1 July 2026 because they have been built into the revised scales.
The new ARA-2026 of 7% is then calculated on the employee’s running basic pay in BPS-2026.
Conveyance Allowance Increased by 50%
The Federal Government also increased normal conveyance allowance for employees in BPS 1 to 22 by 50% of the previous monthly amount, effective from 1 July 2026.
| BPS | Revised Monthly Conveyance Allowance |
|---|---|
| BPS 1–4 | Rs. 2,678 |
| BPS 5–10 | Rs. 2,898 |
| BPS 11–15 | Rs. 4,284 |
| BPS 16 and above | Rs. 7,500 |
This increase is separate from the 7% Ad-hoc Relief Allowance.
Who Gets the 15% DRA-2026?
There has also been some confusion about the 15% Disparity Reduction Allowance 2026.
It is not a universal additional 15% increase for every federal government employee.
The Finance Division notification says DRA-2026 is granted at 15% of basic pay as on 30 June 2022 to employees in BPS 1 to 22 who are already in receipt of Disparity Reduction Allowance, subject to the existing terms and conditions. It applies from 1 July 2026.
So an employee should not automatically add 15% DRA to a salary calculation unless they fall within the notified eligible category.
Salary Increase in Punjab Budget 2026-27
Punjab government employees also received salary relief in the provincial Budget 2026-27.
While presenting the Punjab budget on 16 June 2026, Provincial Finance Minister Mian Mujtaba Shuja-ur-Rehman announced a 7% increase in salaries of Punjab government employees. The same budget announced a 3.5% pension increase for pensioners.
There is also later implementation evidence. In August 2026, the Punjab Local Government Board approved a 7% salary increase for employees in BS-1 to BS-22 under Revised Pay Scales 2026 and Ad-hoc Relief Allowance 2026.
So the answer to the common question, Will there be a salary increase in Punjab in 2026?, is yes. The announced Punjab salary increase for 2026-27 is 7%.
Employees should still distinguish between federal and Punjab rules when checking individual allowances. A federal Finance Division allowance notification should not automatically be assumed to apply to every provincial employee in exactly the same way.
How to Calculate Your Salary Increase
The easiest way to understand the federal 7% relief is to calculate it from your running basic pay under BPS-2026, not your total gross salary.
Use this simple formula:
Running Basic Pay × 7 ÷ 100 = ARA-2026
Suppose an employee’s revised running basic pay under BPS-2026 is Rs.50,000.
The calculation would be:
Rs.50,000 × 7% = Rs.3,500
So that employee’s ARA-2026 would be Rs.3,500 per month before considering applicable deductions.
But do not stop there when estimating the complete new payslip. The employee may also have a revised conveyance allowance, other admissible allowances and deductions. DRA applies only where the employee qualifies under its notification.
For this reason, two employees in the same BPS can have different final salaries due to their pay stage, service position and admissible allowances.
Salary Increase 2026 FAQs
Is the government salary increase in 2026 7% or 10%?
For federal civil employees covered by the current Finance Division notification, the confirmed Ad-hoc Relief Allowance 2026 is 7% of running basic pay under BPS-2026. Older figures such as 10% appeared during the pre-budget discussion period but should not be confused with the final federal ARA notification.
Is the 7% salary increase calculated on basic salary or gross salary?
It is calculated on running basic pay in BPS-2026, not on the total gross salary. If your basic pay under the revised scale is Rs.60,000, for example, the 7% ARA calculation would be Rs.4,200.
When did the new BPS-2026 salary scales start?
The Federal Government’s BPS-2026 revision took effect from 1 July 2026. The implementing Office Memorandum was issued by the Finance Division on 21 July 2026.
Did Punjab increase salaries in Budget 2026-27?
Yes. Punjab’s Budget 2026-27 announced a 7% salary increase for government employees. The provincial budget also announced a 3.5% increase for pensioners.
Does every government employee get the 15% DRA in 2026?
No. The federal DRA-2026 notification applies to employees in BPS 1 to 22 already receiving Disparity Reduction Allowance, subject to the existing conditions. The allowance is 15% of basic pay as on 30 June 2022.
Where can I check the official salary increase notification?
Federal employees can check the original BPS-2026, ARA, conveyance allowance and DRA orders through the Finance Division, Government of Pakistan. The Finance Division’s current regulations page lists the relevant notifications dated 21 July 2026 as well as a later clarification dated 4 August 2026.
Check the Latest Finance Division Regulations
If you are checking your own revised salary, first find your BPS-2026 running basic pay, calculate the 7% ARA on that amount, and then add only those revised allowances that actually apply to you. After payroll is updated, you can also compare the figures with your monthly PIFRA/FABS salary slip.
Fahad Munir is a senior content writer at BondResult.com covering Prize Bonds, education updates, government employee services and selected public schemes. His guides are prepared using official government, board and university sources.