Salary Increase for Government Employees – July 2025

The federal government has officially announced a 10% increase in the running basic salaries of government employees, effective from July 1, 2025. This raise will be provided as an Ad-hoc Relief Allowance 2025.

According to the notification,
“The 10% increase will be based on the current basic salary under the head of Ad-hoc Relief Allowance.”
The President has approved this raise for federal civil employees, armed forces, civil armed forces, and civilian personnel drawing pay from defense expenditures.

Contract Employees Also Included

The government has confirmed that contract employees working under standard Basic Pay Scale terms will also benefit from this 10% increase.

Allowance Will Be Taxable

As stated,
“The amount of Ad-hoc Relief Allowance 2025 will be taxable under the Income Tax Act.”
Employees will continue receiving this allowance during general leave or LPR, but it won’t apply during extraordinary leave.

No Impact on Pension or Foreign Posting

The allowance will not be counted in pension or gratuity calculations, nor will it affect house rent deduction.
“This allowance will not be applicable during foreign postings or deputations.”
However, employees returning from foreign duties will receive it at the domestic rate.

Includes Personal Allowance in Basic Pay

The notification clarifies that basic salary includes personal allowance awarded after reaching the maximum of a pay scale through annual increments.

Budget to Come from Existing Ministry Funds

“This Ad-hoc Relief Allowance for the year 2025–26 will be provided from the budget of the respective ministries, divisions, and departments.”
There will be no additional or supplementary grant issued for this purpose.

30% Disparity Reduction Allowance Also Approved

In a separate notification, the Ministry of Finance confirmed that a 30% Disparity Reduction Allowance (DRA) has been approved for federal government employees from Grade 1 to 22, who are already receiving this benefit.
“This allowance will be effective from July 1, 2025, and will be given based on the basic salary as of June 30, 2022.”