Govt Proposes Higher Tax on Bank Deposits to Offset Salaried Class Relief in Budget 2025–26

The federal government is in talks with the International Monetary Fund (IMF) to introduce a 2 percent increase in tax on income earned from savings accounts and bank deposits, as part of the upcoming 2025–26 federal budget, according to official sources.

The proposal, which would affect both tax filers and non-filers, is intended to help provide income tax relief to the salaried class. However, the IMF has yet to approve the move and has advised the government to ensure that any tax relief is balanced by compensatory revenue measures.

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Officials indicated that this adjustment is being considered due to a decline in tax revenues observed after the imposition of high tax rates during the current fiscal year. The increased tax on passive income sources such as savings and deposits could help bridge the fiscal gap created by potential reductions in income tax for salaried individuals.

Discussions are ongoing, and final decisions will be incorporated into the budget once consensus is reached with the IMF.