Federal Budget 2026–27: Over Rs 18 Trillion Presented, Salary Hike and Major Tax Relief Announced

Jun 13, 2026|Webdesk

Islamabad: Federal Finance Minister Muhammad Aurangzeb has presented the federal budget for fiscal year 2026–27 in the National Assembly, with a total outlay of Rs 18,771 billion. The budget focuses on defense spending, development projects, and relief measures for inflation-hit citizens, particularly salaried individuals.

Key economic indicators and targets

The finance minister highlighted that despite global economic challenges and recent flood impacts, Pakistan’s economy has shown steady improvement:

GDP growth: 3.7%
Economy size: $452 billion
Per capita income: increased from $1,751 to $1,901
Large-scale manufacturing growth: 6.1%
Foreign reserves: over $17 billion (enough for 3 months of imports)
Remittances target: expected to exceed $41 billion
Inflation target: 8.2%
GDP growth target for next year: 4%
FBR tax collection target: Rs 15,264 billion

Relief for salaried class and government employees

The budget proposes a 7% increase in salaries and pensions for government employees and retirees. A 10% increase in minimum wage has also been proposed.

Significant tax relief measures include:

Restructuring of income tax slabs for salaried individuals
Removal of the 9% surcharge on salaried class
Abolition of super tax on corporate incomes between Rs 15–50 crore

PSDP and development spending

A total of Rs 3,675 billion has been allocated for the Public Sector Development Programme (PSDP), including:

Federal development share: Rs 1,000 billion
Provincial development share: Rs 2,224 billion

Major infrastructure and energy projects

Key allocations include:

N-25 Highway (Karachi–Chaman): Rs 100 billion for dualization
Sukkur–Hyderabad Motorway: Rs 30 billion for planning
ML-1 Railway Project: Rs 25 billion for Karachi–Rohri section
Water projects: Rs 103.1 billion for 43 projects including Dasu, Mohmand, and Diamer-Bhasha dams

New tax measures and reforms

Real estate relief: Reduced withholding tax on property purchases and sales for filers
Small retailers: 1% fixed sales tax for businesses with turnover below Rs 2 billion, exempt from POS and audit requirements
Social media income tax: 5% withholding tax on YouTubers and influencers at the time of payment
Health-related relief: Full tax exemption on sanitary products and contraceptives

The government stated that the budget aims to balance economic stability, revenue generation, and public relief while continuing development momentum across key sectors.