Federal Budget 2026-27 Proposed at Over Rs 17.5 Trillion; Salaried Class Expected to Get Rs 50 Billion Tax Relief

Jun 12, 2026|Webdesk

Islamabad: The federal government has finalized preparations for the budget for the fiscal year 2026-27, with a total outlay of over Rs 17.5 trillion. The new budget is expected to set ambitious tax targets for the Federal Board of Revenue (FBR), while also offering relief to the salaried class, solar industry, and education sector.

Revenue targets and economic outlook

For the upcoming fiscal year, the FBR tax collection target is expected to be set at around Rs 15,267 billion. The budget includes proposed new tax measures worth Rs 220 billion, which are expected to generate an additional Rs 1,000 billion in revenue.

Export targets are set at $32.8 billion, while imports are projected at $70 billion. The government also aims to create 2 million new jobs during the fiscal year.

Public relief: solar panels, stationery, and salaried class

In response to public and business concerns, the government has withdrawn the proposed 18% sales tax on solar panels. The proposal to increase taxes on stationery items has also been dropped.

The budget also proposes salary and pension increases for government employees, along with tax relief of up to Rs 50 billion for the salaried class.

Auto sector: push for local EV industry

Major changes are being considered in the automobile sector to promote green energy and local manufacturing:

Imported electric vehicles (EVs): Sales tax may increase up to 25% on imported EVs.
Local EVs: Customs duties and taxes on locally manufactured EV parts may be reduced to just 1%.
Conventional vehicles: A carbon levy is proposed on petrol and diesel vehicles, with petroleum levy collections targeted at Rs 1,727 billion.

Development spending, defense, and debt servicing

The Public Sector Development Programme (PSDP) is proposed at Rs 1,000 billion. However, due to fiscal constraints, no new development projects will be launched in ministries except defense and interior.

Provincial development budgets for Punjab, Sindh, and Khyber Pakhtunkhwa are also proposed to be reduced.

Major expenditures include:

Debt servicing: Rs 7,824 billion
Defense budget: around Rs 3,000 billion

New tax laws: income tax, crypto, and retail sector

The government is considering expanding income tax slabs from 6 to 8, while possibly removing surcharges on annual incomes above Rs 10 million. Corporate super tax may be reduced by 1–2%.

For the first time, capital gains tax (10–30%) on cryptocurrency profits is proposed.

Tax exemptions for former tribal areas (FATA/PATA) may also be withdrawn. Essential food items such as powdered milk, ghee, cooking oil, sugar, and tea may be placed under stricter tax categories, with mandatory retail price printing. Strict penalties are also being planned for retailers not integrated with the FBR POS system.