Islamabad: Federal Government has presented Budget 2026, describing it as a major step toward public relief, economic stability, and national development. Officials said the budget is not merely a collection of figures but reflects a firm commitment to easing the burden on citizens and strengthening the national economy.
The government said that while many countries are reducing subsidies and introducing new taxes due to global economic pressure and uncertainty, Pakistan has chosen a different path by prioritizing public relief. The budget was prepared in coordination with the provinces and is intended to signal confidence, stability, and growth across all major sectors of the economy.
Finance Minister Highlights Defence Success and Diplomatic Role
Finance Minister Muhammad Aurangzeb, while presenting the budget in the National Assembly, said that the world today acknowledges Pakistan’s defence capabilities. He stated that Pakistan’s armed forces delivered a strong response to India and described the success of “Bunyan-um-Marsoos” as a golden chapter in the country’s history.
He further said that Pakistan succeeded in bringing Iran and the United States to the negotiating table, adding that both American and Iranian presidents have repeatedly praised the role of the Prime Minister and the Field Marshal as mediators.
Major Tax Relief for Salaried Class
The budget provides significant relief to the salaried class by completely abolishing a previously imposed 10% surcharge.
Individuals earning between Rs2.2 million and Rs3.2 million annually will now pay 20% tax instead of 23%, resulting in a benefit of approximately Rs65,000. Those earning between Rs3.2 million and Rs4.1 million will see their tax rate reduced from 30% to 25%, with an estimated benefit of Rs102,500.
For incomes between Rs4.1 million and Rs5.6 million, the tax rate has been reduced from 35% to 29%, providing relief of around Rs170,000. For incomes between Rs5.6 million and Rs7 million, the rate has been reduced from 35% to 32%, offering relief of approximately Rs236,000. For those earning above Rs7 million annually, the tax rate remains unchanged, but the removal of the 10% surcharge provides relief of around Rs257,000.
Officials clarified that earlier individuals earning up to Rs4.1 million were directly placed in the 35% tax slab. Under the new structure, two additional slabs for incomes between Rs4.1 million and Rs7 million have been introduced to prevent a sudden tax burden. The 35% rate will now apply only to income above Rs7 million.
Salary Increase for Government Employees
Salaries of government employees and pensions have been increased by 7%, while a 10% increase in the minimum monthly wage has also been proposed.
Relief for Exporters and Industry
The government has announced major relief for exporters and industry. Advance and minimum taxes for exporters have been reduced from 2% to 1.25%.
The super tax has been completely abolished for businesses earning up to Rs500 million. For businesses above this threshold, the super tax rate has been reduced from 10% to 8%.
Property Sector Tax Cuts
The property sector has also received significant relief. Taxes on property sales have been reduced from 4.5% and 5% to 2.75%. Property purchase taxes have been reduced across all slabs to 1.25%.
For filers, the property purchase tax has been reduced from 2.5% to 1.25%.
The government has also abolished the 1% Capital Value Tax on overseas Pakistanis’ property, bringing it down to zero.
Shipping Sector and Health-Related Tax Relief
In a major move for the shipping industry, the 18% sales tax has been completely removed.
Similarly, sales tax on sanitary products including pads, tampons, condoms, and contraceptive medicines has also been abolished to ensure public health and affordability.
IT, Digital Payments and Financial Sector Measures
For the IT and freelancing sector, the existing 0.25% concessional income tax rate has been retained, ensuring policy continuity and investor confidence.
Meanwhile, withholding tax on international online payments made via credit and debit cards has been reduced from 5% to 0.5%.
Refining Sector Incentives and Overall Vision
In the refining sector, the 18% sales tax on brownfield refinery upgrades and related imports has been completely abolished.
The government said Budget 2026 is not only designed for the present but also lays the foundation for a self-reliant and prosperous Pakistan. It added that under the leadership of the Prime Minister and the economic team, policies have been designed to benefit salaried individuals, government employees, exporters, investors, and the general public, ensuring economic stability, investment growth, and broad-based prosperity.
