Pakistan to present Rs17.5 Trillion federal budget for 2026-27

ISLAMABAD: Federal government is set to present a federal budget exceeding 17.5 trillion rupees for the fiscal year 2026-27 on Friday, with proposals under consideration for salary and pension increases for government employees and tax relief measures worth up to 50 billion rupees.

According to official reports, Prime Minister Shehbaz Sharif will chair a special federal cabinet meeting to approve the budget draft and related fiscal proposals before it is presented in parliament by Finance Minister Muhammad Aurangzeb.

The budget aims to set tax revenue targets at around 15.267 trillion rupees, while also offering potential relief for salaried individuals through revisions in income tax slabs.

Officials said no major changes are expected in taxes on solar panels, stationery items, or the stock market. A previously proposed increase in sales tax on solar panels from 10% to 18% has been withdrawn.

However, the government is considering raising sales tax on imported electric vehicles up to 25%, while maintaining existing tax rates on hybrid vehicles. Incentives for locally manufactured electric vehicles are also under review, including reduced duties on motors, batteries, and other components.

A petroleum levy target of 1.727 trillion rupees has been proposed for the upcoming fiscal year. Debt servicing is expected to require 7.824 trillion rupees, while defence spending is projected at around 3 trillion rupees.

Economic projections suggest exports of $32.8 billion against imports of $70 billion, leaving a projected trade deficit of more than $37 billion.

Growth targets include 3.8% for agriculture, 4% for industry, 4.5% for large-scale manufacturing, and 4.2% for the services sector. The government also aims to create 2 million new jobs across agriculture, industry, and services.

Officials said the National Economic Council has already approved a national development plan worth 3.669 trillion rupees, including a federal Public Sector Development Programme of 1 trillion rupees.

The budget also includes proposals for new taxation measures, including bringing cryptocurrency transactions into the tax net and imposing capital gains tax on crypto trading profits. Officials are also considering removing tax exemptions for former tribal areas and expanding sales tax coverage on several food and consumer goods.

Authorities said up to 220 billion rupees in new taxes may be introduced, with overall revenue enhancement measures expected to generate up to 1 trillion rupees in additional income.