Pakistan set to unveil Rs17.8tr budget 2025-26 with tax reforms today

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

Later, he will lay a copy of the Finance Bill, 2025, containing the Annual Budget Statement before the Senate.

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.

Read more: Budget 2025-26: PPP leader proposes 50pc salary, 100pc pension increase

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.

Likewise, CGT on shares and property is likely to increase. The government may also implement taxes on fertilisers, insecticides, and confectionary items, while decreasing tax rates on beverages and cigarettes.

Tax exemptions previously decided for the former FATA region may be eradicated, with the implementation of a 12% tax rate.