ISLAMABAD (Kashmir English): Finance Minister Muhammad Aurangzeb presented the federal budget for fiscal year 2026-27 during the National Assembly (NA) session today, chaired by Speaker Sardar Ayaz Sadiq.
During the proceedings, PTI lawmakers also brought placards and posters into the NA.
Earlier, the federal cabinet, in a meeting chaired by Prime Minister Shehbaz Sharif, approved the Annual Budget 2026-27 documents and the draft Finance Bill. The premier also signed the budget documents after its approval by the cabinet.
Total budget outlay FY2026-27
According to the budget document, the total outlay of the federal budget is fixed at Rs 18,771 billion.
Expenditures: Rs 8,054 billion for interest payments, Rs 1,169 billion for pensions, Rs 3,000 billion for Defence affairs, Rs 1,071 billion for the running of civil government, Rs 1,091 billion for subsidies, Rs 2,680 billion for grants and special areas, and Rs 1,276 billion for development spending and lending.
Funding Resources: Rs11,752 billion from net revenue receipts (tax and non-tax revenue), Rs6046 billion from bank and non-bank borrowing, and Rs974 billion from privatization.
Public Sector Development Programme (PSDP)
The government has set the total National Development Outlay at Rs3.675 trillion, out of which Rs 1,000 billion has been earmarked for Public Sector Development Programme (PSDP), Rs2,224 billion for provincial ADPs, and Rs451 billion for federal state-owned enterprises.
The proposed Rs 1,000 billion PSDP includes Rs 603 billion for infrastructure, Rs 181 billion for social, Rs 13 billion for governance, Rs 41 billion for science and IT, Rs 89 billion for Gilgit-Baltistan and Azad Jammu and Kashmir, Rs 56 billion for merged districts, Rs 13 billion for production, and Rs 5 billion for multiple sectors.
Tax reduction for salaried class
The government has proposed a big relief for the salaried class, reducing annual income tax.
For individuals earning between Rs2.2 million and Rs3.2 million annually, the tax rate has been reduced from 23% to 20%. For those earning between Rs3.2 million and Rs4.1 million, the rate has been cut from 30% to 25%.
Income earners in the Rs4.1 million to Rs5.6 million bracket will now pay 29% tax instead of 35%. For those earning Rs5.6 million to Rs7 million annually, the rate has been reduced from 35% to 32%.
The government has also decided to abolish the surcharge imposed on the salaried class.
Read more: Budget 2026-27: Big relief for salaried class
Salary, pension increase
The government has proposed an increase in the salaries and pensions of public sector employees in the federal budget 2026-27.
As per details, the government has proposed a 7% increase in the salaries of public sector employees and 7% increase in pensions for retired government employees.
In addition, the federal government has suggested a 10% increase in the minimum wage.
Read more: Budget 2026-27: Big relief for govt employees
Allocations for special areas
According to the budget document, a total of Rs144.9 billion rupees has been allocated for the merged districts of Khyber Pakhtunkhwa, Azad Jammu and Kashmir (AJK), and Gilgit Baltistan.
Moreover, Rs 45 billion has been allocated for Azad Jammu and Kashmir, Rs 44 billion for Gilgit Baltistan, and Rs 56 billion for the merged districts of KP.
In addition, R5 billion rupees have been allocated for Azad Jammu and Kashmir and Rs 4 billion rupees for Gilgit Baltistan as a special package of the Prime Minister.
FED on imported vehicles
The federal government has also federal excise duty (FED) on very expensive imported luxury electric vehicles costing above Rs 20 million.
Similarly, FED will be imposed on imported vehicles above 2000 CC and 3000 CC, Finance Minister Aurangzeb said.
He further said that the government has proposed to continue tax incentives for electric vehicles, including motorcycles, rickshaws, cars, and buses.
He further proposed a one percent sales tax on imported electric trucks to promote electric technology in the transport and logistics sector.
Read more: Budget 2026-27: Govt proposes FED on imported luxury electric vehicles
Key outcomes
- Proposal to eliminate tax on sanitary pads and related items essential for women’s health, dignity, and full participation in social activities.
More to Follow
