Pakistan unveils Rs17.6 Trillion Budget today with focus on Tax Revenue, Relief

ISLAMABAD – Pakistani government is all set to present Rs17.6 trillion budget for fiscal year 2025-26 today on June 10 Tuesday, with focus on expanding tax base, cutting exemptions, and passing on relief for masses under suggestions set by the International Monetary Fund (IMF).

Finance Minister Muhammad Aurangzeb, while presenting an Economic survey assured that recovery is underway and reforms will continue, especially in state-owned enterprises and the energy sector. He called it a budget of stability and progress with focus on growth, investment, and taxes.

Budget 2025-26

Economic Indicators

• GDP Growth: 2.7% in 2025
• Inflation: Dipped from 29% to 4.5%
• Interest Rate: Cut from 22% to 11%
• SOE Losses: Rs800 billion
• Debt-to-GDP Ratio: Improved from 68% to 65%

With stern changes, the government eyed massive tax collection target of Rs14.13 trillion. With total income projected at Rs19.4 trillion, the government is rolling out new taxes on digital economy, agricultural income, and previously untaxed sectors.

Salary Increment 

In a major relief move, the government planned 30pc allowance increase for employees in Grades 1 to 16, along with the merger of ad hoc allowances into their basic pay. Pensioners will receive an increase of 5% to 7.5%, offering support amid inflationary pressures.

Tax Proposals

The budget includes tax proposals aligned with IMF guidelines, such as levies on fertilizers, pesticides, and bakery items. Freelancers and social media earners are also expected to come under the tax net. Taxation on agriculture, a politically sensitive issue, will be addressed through a new structured plan.

The government is planning to abolish federal excise duty on property transactions while imposing taxes in the erstwhile FATA regions. Regulatory duties on over 3,500 imported items may be lowered, with customs duties on industrial raw materials expected to drop by 2–3% to support local production.

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The super tax on high-income companies is set to be gradually reduced, and tax rates on construction materials may be eased to stimulate the real estate sector.

Defense Expenditure

Pakistan aims to boost exports to $44.9 billion in FY25, with imports projected at $65.2 billion. Remittances are expected to climb to $39.4 billion. Defense spending will increase by 18%, reflecting growing national security demands.

Key Highlights from Economic Survey 2024–25