The Finance Division, Government of Pakistan has issued an important notification regarding the Special Allowance 2026 for Federal Employees. The notification was issued on 21 August 2026 and concerns the revision of the minimum wage/gross salary for certain civil employees of the Federal Government.
Under the new decision, the minimum wage/gross salary has been increased from Rs. 37,000 to Rs. 40,700 with effect from 1 July 2026. The revised amount will remain applicable until further orders.
Finance Division Special Allowance Notification 2026
According to the Finance Division Notification dated 21-08-2026, the Federal Government has enhanced the minimum wage/gross salary from Rs.37,000/- to Rs.40,700/- with effect from 1 July 2026.
The decision applies to civil employees of the Federal Government. It also covers civilians paid from Defence estimates, including contingent paid staff and contract employees appointed against civil posts in Basic Pay Scales on standard terms and conditions of contract employment.
Employees whose gross salary is below Rs.40,700/- will be allowed the difference as Special Allowance.
Revised Minimum Salary for Federal Employees 2026
| Particular | Previous Rate | Revised Rate | Effective Date |
|---|---|---|---|
| Minimum Wage / Gross Salary | Rs. 37,000 | Rs. 40,700 | 1 July 2026 |
Who Will Get Special Allowance 2026?
The revised Special Allowance 2026 is applicable to eligible civil employees of the Federal Government whose gross salary is less than Rs.40,700/-. The difference between their existing gross salary and Rs.40,700/- will be allowed as Special Allowance, subject to the terms and conditions mentioned in the notification.
The notification also includes civilians paid from Defence estimates, contingent paid staff and contract employees working against civil posts in Basic Pay Scales under standard terms and conditions of contract employment.
Special Allowance 2026 – Important Terms and Conditions
The Finance Division has also specified important conditions regarding payment and treatment of the Special Allowance. The main points are given below:
| No. | Terms & Conditions |
|---|---|
| 1 | The Special Allowance will be subject to Income Tax. |
| 2 | The allowance will be admissible during leave and the entire period of LPR, except during extraordinary leave. |
| 3 | The Special Allowance will not be treated as part of emoluments for calculation of Pension or Gratuity. |
| 4 | The allowance will not be considered for recovery of House Rent. |
| 5 | The allowance will not be admissible during posting or deputation abroad. |
| 6 | On repatriation from posting/deputation abroad, the employee may receive the rate and amount that would have been admissible if the employee had not been posted abroad. |
Special Allowance Will Be Subject to Income Tax
One important condition of the Special Allowance 2026 for Federal Employees is that the amount will be subject to income tax. Therefore, the allowance should not be considered a completely tax-free payment.
Special Allowance During Leave and LPR
The notification states that the Special Allowance will be admissible during leave and throughout the entire period of LPR, except during extraordinary leave.
Special Allowance and Pension / Gratuity
The revised Special Allowance will not be treated as part of emoluments for the purpose of calculating pension and gratuity. It will also not be considered for recovery of House Rent.
Special Allowance During Posting Abroad
The Special Allowance will not be admissible to employees during the period of their posting or deputation abroad.
However, after repatriation from posting or deputation abroad, the employee will be allowed the rate and amount of Special Allowance that would have been admissible had the employee not been posted abroad, according to the terms given in the notification.
Budget for Special Allowance 2026
The Finance Division has directed that the Special Allowance and increase in minimum wage will be accommodated from within the existing budgetary allocation for the financial year 2026-2027.
The respective Ministries, Divisions and Departments will have to manage the required expenditure from their allocated budget. The notification specifically states that no supplementary grants will be provided on this account.
Special Allowance 2026 – Quick Summary
| Detail | Information |
|---|---|
| Issuing Authority | Finance Division, Government of Pakistan |
| Notification Date | 21 August 2026 |
| Effective Date | 1 July 2026 |
| Previous Minimum Wage / Gross Salary | Rs. 37,000 |
| Revised Minimum Wage / Gross Salary | Rs. 40,700 |
| Difference | Rs. 3,700 |
| Applicable To | Eligible Civil Employees of Federal Government |
| Defence Civilians | Included as specified in the notification |
| Contract Employees | Included where they meet the stated conditions |
| Income Tax | Applicable |
| Pension / Gratuity | Not treated as emoluments for calculation |
| House Rent Recovery | Not treated as emoluments for this purpose |
| Financial Year | 2026-2027 |
Rs. 3,700 Increase in Minimum Gross Salary
The difference between the previous minimum gross salary of Rs.37,000 and the revised minimum gross salary of Rs.40,700 is Rs.3,700.
Employees whose gross salary is below Rs.40,700/- will therefore be allowed the applicable difference as Special Allowance under the conditions of the Finance Division notification.
Notification Reference
| Department | Government of Pakistan, Ministry of Finance |
|---|---|
| Notification Type | Office Memorandum |
| Subject | Revision of Special Allowance Granted to the Civil Employees of the Federal Government |
| Notification Date | 21 August 2026 |
| Reference No. | No.1(2)R5/2022-PT-0001 |
| Effective From | 1 July 2026 |
Final Words
The Special Allowance 2026 for Federal Employees is an important decision for eligible employees of the Federal Government. The Finance Division has revised the minimum wage/gross salary from Rs.37,000 to Rs.40,700 with effect from 1 July 2026.
The revised amount is applicable until further orders, and employees with gross salary below Rs.40,700/- will be allowed the difference as Special Allowance according to the notification. The allowance will be subject to income tax and will have specific rules regarding leave, LPR, pension, gratuity, house rent and posting abroad.
Employees should check their salary details and the applicable rules through their concerned office, department or accounts office before making any claim based on this notification.
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پنجاب والے بیچارے رل گئے ہیں۔ان کا کوئی کچھ نہیں
and for Punjab Employees?