ISLAMABAD: Finance Minister Muhammad Aurangzeb on Friday presented Pakistan’s federal budget for fiscal year 2026-27, proposing total expenditures of Rs18.771 trillion, a 7 percent increase in salaries and pensions, and a defence allocation of Rs3 trillion.
The budget aims to balance economic growth, fiscal discipline, social protection, and development spending while providing targeted relief to salaried individuals, exporters, businesses, and low-income households.
Key Budget Targets
According to the budget documents, the government has set an FBR revenue target of Rs15.264 trillion, while economic growth is projected at 4 percent and average inflation is expected to remain around 8.2 percent during the next fiscal year.
The federal government expects net revenues of Rs11.751 trillion, while provinces are projected to receive Rs8.848 trillion as their share from federal taxes.
Salaries, Pensions and Minimum Wage
The government has proposed a 7 percent increase in salaries for federal employees and a 7 percent increase in pensions for retired government workers. It has also announced a 10 percent increase in the minimum monthly wage, raising it from Rs37,000 to Rs40,700.
In addition, the government plans to reduce income tax rates for several salaried income brackets and abolish the surcharge previously imposed on salaried taxpayers.
Defence and Development Spending
The budget allocates Rs3 trillion for defence, citing regional security challenges and national security priorities.
For development spending, the government has proposed a Public Sector Development Programme (PSDP) of Rs3.675 trillion, including Rs1 trillion for federal projects and Rs2.224 trillion for provincial development initiatives. Major allocations have been earmarked for transport, energy, water, education, and health projects.
Relief for Businesses and Exporters
The government announced the abolition of super tax for companies earning between Rs150 million and Rs500 million annually, while reducing the rate for larger firms.
Exporters received additional relief through the removal of the Export Development Surcharge and a reduction in export financing costs. The concessional tax rate of 0.25 percent on IT exports will also remain in place.
Social Welfare and Public Support
The budget allocates Rs838 billion for the Benazir Income Support Programme to expand financial assistance for low-income families.
The government also announced tax exemptions on sanitary products and contraceptives, alongside the removal of customs duties on more than 100 categories of raw materials used in the local production of cancer and other essential medicines.
Electric Mobility and Agriculture
To promote sustainable transportation, the government unveiled subsidized financing for electric bikes and electric rickshaws under its vehicle electrification strategy. Farmers will receive access to Rs300 billion in agricultural financing under various support programmes.
Officials said the measures are intended to boost agricultural productivity, encourage clean transportation, and support economic growth.
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