The federal government will provide a special allowance to eligible employees earning below Rs. 40,700, with the revised minimum applicable from July 1, 2026.
The federal government has raised the minimum monthly salary for its employees to Rs. 40,700, introducing a special allowance for eligible workers whose existing earnings fall below the newly approved threshold.
Under the revised pay arrangement, federal employees earning less than Rs. 40,700 per month will receive an additional allowance to cover the difference between their existing salary and the new minimum level. The measure is designed to ensure that eligible employees do not receive total monthly earnings below the revised salary floor.
The new arrangement will take effect retrospectively from July 1, 2026, meaning qualifying employees will be entitled to the adjustment from the beginning of the current financial year.
The revised minimum represents an increase of Rs. 3,700 from the previous threshold of Rs. 37,000. This amounts to an increase of approximately 10%.
The decision is part of the federal government’s broader pay-related measures for the 2026-27 financial year. Under the revised compensation framework, federal civil employees have also been granted a 7% Ad Hoc Relief Allowance on basic pay with effect from July 1, 2026.
The minimum-income protection mechanism is expected to provide greater support to lower-paid federal employees by bringing their monthly earnings up to the newly established threshold.
Officials have structured the arrangement so that employees whose salaries remain below Rs. 40,700 can receive the required additional amount through the special allowance rather than remaining below the government’s approved minimum.
The measure comes amid broader revisions to federal employee compensation for the new fiscal year and rising financial pressures on salaried households.
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