The clarification was issued on Thursday in response to the media reports alleging that Khan's gross salary was being increased to 800,000 Pakistani rupees ($5,179), reports Dawn news.
"At a time when the Prime Minister was carrying out a campaign to slash the government's expenditures which he initiated from his own, the propagation of such a baseless and concocted news report was unfortunate," an Off spokesperson remarked, according to a press release.
The spokesperson quoted Khan as saying that expenditures incurred on the head of the government were borne out of the people's hard-earned money, so it was a must to keep it at the minimum level.
During a cabinet meeting on Thursday, Minister for Communications and Postal Services Murad Saeed said that Khan was living at his private residence at Banigala despite being the premier and even spent money from his own pocket for the construction of the road leading to his residence.
The development comes after Khan recently disclosed that he could not cover his household expenses from his official salary, Dawn news said in the report.
"We have reduced the expenses of Prime Minister House by 40 per cent. I live in my own home, pay my own expenses. My (official) salary is not enough to cover the expenses of my own household," he said at an event.
The premier also said that his expenses on foreign trips were 10 times less than those spent by leaders before him.
Describing his participation in the World Economic Forum's annual meeting as the "cheapest" official visit, Khan had said that his trip was sponsored by his friends and well-known businessmen Ikram Sehgal and Imran Chaudhry.
This is not the first time the Prime Minister's salary has come under public discussion.
Last year, it was reported that Khan earned less than federal and provincial ministers.
As per his February 2019 salary slip, the Prime Minister is entitled to a gross salary of 201,574 Pakistani rupees which is reduced to 196,979 after tax and other deductions.
( With inputs from IANS )