ISLAMABAD – Web Desk: The federal government will present the budget for fiscal year 2026-27 today, with an estimated volume exceeding Rs 17.5 trillion. The budget is expected to include salary and pension increases for government employees and up to Rs 50 billion in tax relief, while the tax revenue target is projected at Rs 15,267 billion.
The federal cabinet will approve the budget draft and salary/pension increases in a special session chaired by Prime Minister Shehbaz Sharif, after which Finance Minister Muhammad Aurangzeb will present the budget in Parliament.
Tax and Customs Highlights
The government has decided not to change taxes on solar panels, stationery items, and the stock market. The proposal to increase sales tax on solar panels from 10% to 18% has been withdrawn. Customs duty on motors, batteries, and other components for local electric vehicle manufacturing is proposed at 1%, with sales tax also at 1% and full exemption from federal excise, capital value, and withholding tax.
Electric vehicle imports may face a sales tax increase to 25%, while hybrid vehicle taxes will remain unchanged. Carbon levies on fossil fuel vehicles are proposed. Petroleum levy is projected to raise Rs 1,727 billion. Defense spending is proposed at approximately Rs 3,000 billion. Interest payments on debt are projected at Rs 7,824 billion.
Income Tax Relief for Salaried Class
The number of income tax slabs may increase from 6 to 8. Monthly income up to Rs 183,000 may receive relief. For monthly income up to Rs 267,000, a 5% tax reduction is proposed (from 25% to 20%), benefiting approximately 400,000 employees. Monthly income up to Rs 467,000 may be taxed at 29%, up to Rs 583,000 at 32%, with maximum tax of 35% on higher incomes. The surcharge on annual income exceeding Rs 10 million may be eliminated.
Crypto Tax and Other Measures
Capital gains tax on crypto trading profits (10-30%) is likely to be introduced, with Section 37C added to the Tax Act 2001. The tax exemption for former tribal areas (FATA/PATA) may be eliminated. Dozens of food items, including infant formula, ghee, cooking oil, tea, sugar, and milk powder, may require retail price printing on packaging for sales tax collection under the third schedule. New taxes worth Rs 220 billion are proposed, with an additional Rs 1,000 billion expected through new enforcement measures.
