Islamabad – The Government of Pakistan is set to present the Federal Budget 2026-27 today, featuring a combination of relief measures for salaried individuals and government employees alongside ambitious tax collection targets and significant debt repayment obligations.
Finance Minister Muhammad Aurangzeb will present the federal budget and key financial documents before the National Assembly.
The proposed budget is expected to have a total outlay of approximately PKR 18 trillion.Among the major relief measures, the government is considering a salary increase of up to 10 percent for public sector employees.
In addition, income tax relief is expected for salaried individuals earning between PKR 1.2 million and PKR 3.6 million annually.
Sources indicate that the number of income tax slabs for salaried taxpayers may be increased from six to eight, while the existing 10 percent surcharge on annual incomes exceeding PKR 10 million could be abolished.
The budget also proposes a reduction in the Super Tax; however, no reduction is expected in the corporate income tax rate.Several consumer products may become more affordable under the new budget.
Customs duties and taxes on imported cosmetics and personal care items, including makeup products, face powder, mascara, shampoo, and soap, are expected to be reduced, potentially lowering retail prices.On the other hand, environmentally friendly vehicles may become more expensive.
The government is considering increasing the sales tax on locally manufactured hybrid vehicles from 8.5 percent to 18 percent.
Authorities have also warned the automobile industry that tax incentives could be withdrawn if manufacturers fail to increase the local production of vehicle parts.
To finance expenditures, the government is expected to set a tax revenue target of PKR 15.264 trillion for the next fiscal year. New taxation measures worth approximately PKR 220 billion may be introduced to achieve this target.
Revenue collection from the Petroleum Development Levy is projected at PKR 1.727 trillion. The government is also considering increasing the climate levy on petroleum products from PKR 2.5 per litre to PKR 5 per litre.
Additionally, a target of PKR 151 billion is expected to be set for gas surcharge collections.A substantial portion of the federal budget will be allocated to debt servicing.
The government estimates total debt and interest payments of PKR 7.824 trillion during the next fiscal year. Of this amount, PKR 6.652 trillion will be used for domestic debt servicing, while PKR 1.107 trillion will be allocated for foreign debt repayments.
Non-development expenditures for federal ministries and departments are expected to reach PKR 1.07 trillion, while pension-related expenditures may exceed PKR 1.1 trillion.The government is also proposing an increase in funding for the Benazir Income Support Programme (BISP), with an allocation of PKR 838 billion. Under the proposal, the quarterly stipend for beneficiaries could rise from PKR 13,000 to PKR 14,500.
To implement the proposed fiscal measures, tax revisions, and economic policies, the government will introduce the Finance Bill 2026. Following parliamentary approval, the budgetary measures are expected to take effect nationwide from July 1, 2026.