Budget 2025-26: Gas, electricity prices expected to increase from July 1

ISLAMABAD: The upcoming federal budget for the FY2025-26 is likely to bring a significant hike in gas and electricity prices, ARY News reported, citing sources on Tuesday.

Finance Minister Muhammad Aurangzeb will present budget 2025-26 with total outlay of Rs17.8 trillion in the National Assembly today.

Electricity tariffs are expected to increase by Rs7.12 per unit starting July 1, 2025, as the circular debt in the power sector has surged again to Rs2.396 trillion.

Sources indicate that a 10% debt service surcharge (DSS) is also expected to be added to monthly electricity bills, which will reportedly be collected from consumers over the next six years. To manage repayments, the government plans to borrow Rs1.252 trillion from banks.

Additionally, provincial governments may face restrictions on providing electricity subsidies under new fiscal guidelines.

Meanwhile, the gas sector’s circular debt has also reached Rs2.85 trillion, prompting a proposed hike of Rs116.90 per MMBTU in gas tariffs from July 1, 2025, with another increase on February 15, 2026.

A uniform gas tariff will be implemented in Sindh and Balochistan. However, consumers are unlikely to get benefit of any decrease in Sui Southern Gas Company (SSGC) tariffs.

Meanwhile, budget 2025-26 summaries certain relief measures for salaried individuals, including a 10% salary increase for government employees and a 5% to 7.5% increase in pensions for retired civil servants.

Employees in Grades 1 to 16 are set to receive a 30% special allowance, which will be integrated into their basic pay, replacing ad hoc relief.

In budget 2025-26, the Government of Pakistan aims to broaden the tax base, reduce tax evasion, and enhance revenue collection, while still providing limited support to salaried individuals.

Under the influence of the International Monetary Fund (IMF), the government is considering imposing an agricultural income tax for the first time. Digital earnings through freelancing or other online platforms will also be taxed, especially foreign earnings.