Pakistan Federal Employees Paid Below Rs 40,700 Get a Special Allowance: Check Your Payslip
Federal civil employees in Pakistan paid under Rs 40,700 a month get the gap as a Special Allowance from 1 July 2026. See who is covered and how to check.
If you work for the federal government in a basic pay scale and your gross monthly salary is below Rs 40,700, the Finance Division says you must be paid the gap as a Special Allowance. The rule runs from 1 July 2026. Check your July, August and September payslips for a line called Special Allowance.
The Finance Division issued the order as an Office Memorandum on 21 August 2026. It raises the minimum salary of federal civil employees from Rs 37,000 to Rs 40,700. We opened the memorandum on the Finance Division's own circulars page and read it in full. The rules below come from that document, and from nowhere else.
The Special Allowance tops up pay to Rs 40,700
The memorandum raises the federal minimum wage floor to Rs 40,700 a month from 1 July 2026. Anyone whose gross salary is lower gets the difference as a Special Allowance, paid on top of normal pay.
It covers civil employees of the federal government. That includes civilians paid from Defence estimates, contingent paid staff, and contract employees on civil posts in basic pay scales on standard contract terms. It is a federal order. Provincial employees are not covered by it.
The order says the money must come from each ministry's own 2026-27 budget. No extra grant will be given for it. That is worth knowing, because an office that has not planned for it may be slow to pay.
A worked example shows how big your gap is
The amount is simple subtraction: Rs 40,700 minus your gross salary. The memorandum uses the words "gross salary" and does not list the heads inside it. Ask your drawing and disbursing officer (DDO) which heads your office counts.
| Gross salary before the top-up | Special Allowance | Total pay |
|---|---|---|
| Rs 38,500 | Rs 2,200 | Rs 40,700 |
| Rs 39,000 | Rs 1,700 | Rs 40,700 |
| Rs 40,000 | Rs 700 | Rs 40,700 |
| Rs 40,700 or more | Nothing | No change |
These figures are our own arithmetic using the rule. They are not taken from any payslip.
The Revised Basic Pay Scales 2026 set the minimum basic pay of the lowest scale, BPS-1, at Rs 16,280 before allowances. We could not find an official count of how many employees fall below Rs 40,700, so we cannot say how many people the top-up reaches. It is most likely to matter for contract staff and for anyone whose pay is a small basic plus fixed allowances.
Five conditions come with the allowance
The memorandum sets five terms. Read them before you count on the money for anything else.
- It is subject to income tax.
- It is paid during leave and the whole of leave preparatory to retirement, except extraordinary leave.
- It does not count as part of emoluments when pension or gratuity is worked out, or when house rent is recovered.
- It is not paid while you are posted or deputed abroad.
- It is paid again from the day you return from a foreign posting, at the rate you would have had if you had never left.
The pension point is the one people miss. The top-up raises what you take home. It does not raise your future pension. Pensions got a separate rise, explained in the 7% federal pension increase.
Check your payslip in four steps
You do not need to apply. The order says the allowance is to be granted, so your office should add it. If it has not, follow these steps.
- Open your last three payslips. Look for a line called Special Allowance, dated from July 2026.
- Add your gross salary before any top-up and compare it with Rs 40,700.
- If you are below the line and the allowance is missing, write to your DDO. Quote the Finance Division Office Memorandum dated 21 August 2026 and the file number 1(2)R5/2022-PT-0001.
- Ask in the same letter about July and August. The memorandum is silent on arrears, so only your accounts office can say how the back months will be handled.
If your DDO refuses in writing and you are a civil servant, you may have a service appeal. The steps for that are in how to file a Federal Service Tribunal appeal.
Private workers in Islamabad follow a different rule
This order covers government pay. A private shop, factory or office in the capital falls under a different minimum wage notice. We explain how to claim the shortfall in the Islamabad minimum wage report, where the Rs 40,700 figure is reported for private employers.
Do not mix the two. The same number appears in both, but the legal basis, the employer and the place to complain are different.
Common questions
Who gets the Rs 40,700 Special Allowance?
Federal civil employees, including contract, contingent paid and Defence-paid civilians, whose gross salary is below Rs 40,700.
From which date does it apply?
From 1 July 2026, until further orders.
Is the Special Allowance taxed?
Yes. The memorandum says it is subject to income tax.
Does it increase my pension?
No. It is not counted in emoluments for pension or gratuity.
Does it apply to provincial government staff?
No. It is a federal order. Provinces issue their own pay orders.
How we verified this
What we checked, where we read it, and what we could not confirm.
Last checked on 11 October 2026. We read the Finance Division Office Memorandum on revision of special allowance, dated 21 August 2026, on the circulars page at finance.gov.pk, and the Revised Basic Pay Scales 2026 memorandum dated 21 July 2026 for the BPS-1 minimum. We did not see any later memorandum that changes the amount. The memorandum says nothing about arrears, and we have not been able to confirm how any office has handled them.
About the author
Public Services and Education Journalist
Fajr Riaz is a journalist and content writer at Pakistan Era, based in Lahore. She covers the questions people meet in everyday life in Pakistan: how a public service works, what a change in the rules means, and where to find a reliable answer.
