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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.

Islamabad: The federal government is set to present the Federal Budget for fiscal year 2026-27 today, with a total outlay exceeding Rs17.5 trillion.

The budget is expected to include increases in salaries and pensions for government employees, along with tax relief measures worth up to Rs50 billion. Despite the proposed relief, the government is likely to set a tax revenue target of Rs15.267 trillion for the next fiscal year.

According to reports, a special meeting of the federal cabinet, chaired by Prime Minister Shehbaz Sharif, will be held today to approve the draft budget for FY2026-27 as well as proposed increases in salaries and pensions for public sector employees. Following cabinet approval, Finance Minister Muhammad Aurangzeb will present the federal budget in Parliament.

Sources said the government has decided not to make any changes to taxes imposed on solar panels, stationery items, and the stock market. A proposal to increase the sales tax on solar panels from 10 percent to 18 percent has been withdrawn, while a suggested increase in sales tax on stationery products has also been excluded from the budget.

However, the budget is expected to raise the sales tax on imported electric vehicles (EVs) to 25 percent, while existing tax rates on hybrid vehicles are likely to remain unchanged. Tax incentives for environmentally friendly electric vehicles are also under consideration, while a carbon levy is proposed on vehicles running on conventional fuels. The move could make larger vehicles more expensive, while locally manufactured electric vehicles may become more affordable.

To encourage domestic EV production, the government has proposed reducing customs duty on motors, batteries, and other EV components to one percent. It has also recommended maintaining sales tax at one percent and granting complete exemptions from Federal Excise Duty, Capital Value Tax, and Withholding Tax on these components.

Sources further revealed that the government plans to collect Rs1.727 trillion through petroleum levy in the upcoming fiscal year. An allocation of Rs7.824 trillion has been proposed for debt servicing, while approximately Rs3 trillion is expected to be earmarked for the defense sector.

The country’s trade deficit is projected to remain above $37 billion during FY2026-27. The export target has been set at $32.8 billion, while imports are estimated at $70 billion.

Economic targets for the next fiscal year include agricultural growth of 3.8 percent, industrial growth of 4 percent, large-scale manufacturing growth of 4.5 percent, and services sector growth of 4.2 percent. The government has also set a target of creating two million new jobs, including 1.1 million in the services sector, 500,000 in industry, and 400,000 in agriculture.

The National Economic Council (NEC) has already approved key economic targets for the upcoming budget, along with a national development plan worth Rs3.669 trillion. The size of the federal Public Sector Development Programme (PSDP) has been set at Rs1 trillion.

A total of Rs2.218 trillion has been allocated for development projects across the four provinces, while the federal and provincial governments are expected to jointly save Rs1.046 trillion in development spending. Development allocations have been reduced by Rs701 billion for Punjab, Rs110 billion for Sindh, and Rs109 billion for Khyber Pakhtunkhwa.

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Sources said it has been decided that no new development projects will be launched except those related to defense and the Ministry of Interior.

The government is also considering tax relief of approximately Rs50 billion for the salaried class. The number of income tax slabs may be increased from six to eight. According to sources, relief is being considered for individuals earning more than Rs183,000 per month.

Tax concessions for higher-income earners are also under discussion. Under a proposed plan, income tax on monthly earnings of up to Rs267,000 could be reduced by five percentage points, bringing the applicable tax rate down from 25 percent to 20 percent. Nearly 400,000 employees are expected to benefit from this measure.

Sources said proposals are also being reviewed to impose a 29 percent tax rate on monthly income up to Rs467,000 and a 32 percent tax rate on monthly income up to Rs583,000. The maximum tax rate of 35 percent is likely to remain unchanged for individuals earning more than Rs583,000 per month.

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The same rate structure is proposed for individuals with annual incomes exceeding Rs7 million, while the surcharge currently imposed on those earning more than Rs10 million annually may be abolished.

In addition, the federal budget for FY2026-27 is expected to bring cryptocurrency transactions into the tax net. Sources said a Capital Gains Tax may be imposed on profits earned through crypto trading.

Islamabad: Finance Minister Muhammad Aurangzeb presented the National Economic Survey 2025-26, highlighting that Pakistan’s economy grew by 3.7% in the current fiscal year despite domestic and international challenges.

He stated that global economic uncertainties have affected the international economy, and while growth was expected to exceed 4%, the country maintained strong performance even amid the Middle East crisis.

Minister Aurangzeb noted that the economic survey reflects the performance of the entire fiscal year. The first months of the year faced uncertainty, compounded by monsoon rains impacting the economy. Nevertheless, he said, Pakistan’s economy demonstrated resilience, and the government successfully managed crises.

Key highlights from the survey include:

• Economic Size: Pakistan’s economy surpassed $452 billion.
• Agriculture: Growth in the sector was 2.89%, with dairy and livestock contributing 60% to agricultural output.
• Industry: Large industries recorded 6.1% growth, with 16 sectors including food and textiles showing positive trends. Cement demand rose 10%, and fertilizer demand increased 17%.
• Services Sector: Achieved growth of 4.9%.

On fiscal management, Minister Aurangzeb stated that financial discipline led to a significant reduction in the fiscal deficit, while FBR revenues rose by 10.1%. Remittances showed notable growth, exceeding $33 billion in the first 10 months of the fiscal year.

He emphasized the importance of remittances for external payments and noted that the Roshan Digital Account is aimed at encouraging investment.

Regarding trade, he mentioned that overall exports declined due to rice and sugar, but textiles remained a key export contributor. The petroleum sector grew by 5%, and sports exports—including footballs for FIFA and the World Cup—exceeded $3 billion. Freelancers’ contributions reached $1 billion.

Foreign exchange reserves exceeded $17 billion, and are expected to reach $18 billion by the end of June. The Pakistan Stock Exchange investor base rose to over 563,000, with 11 new companies listed this year and more than 39,000 new companies registered, bringing the total to over 297,000.

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On credit and social support, private sector loans increased by PKR 934 billion from July to March, while PKR 2,162 billion in loans were provided to the agriculture sector. The Benazir Income Support Programme (BISP) budget for low-income families was increased to PKR 722.5 billion.

Minister Aurangzeb also stated that the government is accelerating privatization of state-owned entities including PIA, FWBL, and DISCOS, while initiating right-sizing measures, merging ministries, and closing multiple departments including PWD.

This economic survey underscores Pakistan’s resilience in the face of internal and external challenges, while showing steady growth across agriculture, industry, and services, alongside improving fiscal and investment indicators.