Budget 2026-27: Salary raise percentage of govt employees 'finalized'

The upcoming federal budget 2026-27 volume is expected to be set at around Rs. 18 trillion, while new taxes worth Rs. 220 billion may be imposed, government employee ara likely to receive a salary increase. 

According to the budget document, government employees are likely to receive a 10 percent salary increase, while relief in income tax for salaried individuals is also expected.

The tax relief for individuals earning between Rs. 1.2 million to Rs2.4 million annually is also expected.

Authorities are also reportedly considering a reduction in the super tax, although the corporate income tax rate is expected to remain unchanged.

The non-development budget for federal ministries and departments may be set at around Rs. 1,070 billion, while pension allocations are expected to exceed Rs. 1100 billion.

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The Benazir Income Support Program (BISP) is likely to receive Rs. 838 billion, with a proposed increase in quarterly stipends from Rs. 13,000 to Rs. 14,500 for beneficiaries.

A proposal is also under consideration to increase the climate levy on petroleum products from Rs. 2.5 to Rs. 5 per litre. In addition, duties on imported cosmetic products such as makeup items, shampoo, and soap may be reduced.

The Petroleum Development Levy target is projected at Rs. 1,727 billion, while the gas surcharge target is expected to be set at Rs. 151 billion.

In the auto sector, authorities are considering increasing sales tax on locally assembled hybrid vehicles from 8.5 percent to 18 percent. The auto industry may also lose tax concessions if it fails to meet local parts manufacturing requirements.

The overall tax collection target could be set at Rs. 15,264 billion. Non-tax revenue is estimated at Rs. 2,768 billion.

On account of the federal excise duty, the target of Rs. 1047 billion, on sales tax account Rs. 4727 billion, and on account of customs duty Rs. 1651 billion is expected to be set.

Meanwhile, Rs. 7,824 billion is projected for interest payments and debt servicing for the center, including Rs. 6,652 billion for domestic debt and Rs. 1,107 billion for external loans.