The federal government is set to unveil a Rs17,600 billion budget for the upcoming fiscal year today, with a focus on increasing revenues through new taxation measures while offering relief to lower-grade government employees.
The Federal Board of Revenue (FBR) is targeting a record-breaking tax collection goal of Rs14,130 billion.
According to official sources, the total income for the next fiscal year has been estimated at Rs19,400 billion, suggesting a tight fiscal space where additional taxes will be imposed across multiple sectors, but select industries will also see reductions or exemptions in duties.
Big relief for employees, pensioners
In a major relief move, government employees from Grades 1 to 16 are expected to receive a 30% allowance, while an ad hoc relief allowance will be merged into the basic salary structure. Pensions for retired employees are also set to rise between 5% to 7.5%.
New taxes: Freelancers, digital earners, agriculture in net
In a significant policy shift, the government plans to bring freelancers and digital content creators into the tax net, taxing income earned from international freelancing and social media platforms.
Moreover, the upcoming budget is expected to include a new framework to tax agricultural income, a long-standing demand from the International Monetary Fund (IMF) and economic experts alike.
The IMF has also urged Pakistan to impose taxes on fertilizers, pesticides, and bakery items, potentially increasing the cost of essential goods if approved.
Property and customs: Some relief, some pressure
While federal excise duty on property transactions is likely to be abolished, the government is mulling the imposition of a 12% tax in the formerly exempt FATA region.
At the same time, regulatory duties on over 3,500 imported items are expected to be reduced, and customs duty could drop by 2% to 3% on imported goods and industrial raw materials — a move aimed at supporting domestic manufacturing and exports.
Changes in indirect taxes and industry-specific measures
Some sectors may see reduced taxes, such as the beverages and cigarette industries, which are likely to benefit from a cut in duties. Additionally, a 5.5% increase in GST on locally assembled vehicles up to 850cc is under review, potentially raising car prices for budget-conscious consumers.
The super tax on large corporations is expected to be gradually reduced, and a lower withholding tax rate on construction raw materials is also being considered to support the real estate and development sector.
Trade targets and defense spending
The federal government has set ambitious trade goals, with total exports projected at $44.9 billion, of which $35.3 billion will come from goods alone, while imports are expected to touch $65.2 billion.
Meanwhile, the defense budget is expected to see an 18% increase, reflecting growing national security demands.
The National Assembly speaker has finalised the calendar for the budget session, which outlines key dates for debate, discussion, and voting on the budgetary proposals and finance-related matters.
As per the schedule:
- The budget presentation will take place on June 10.
- The National Assembly will not meet on June 11 and 12.
- The general debate on the federal budget will commence on June 13, with time allocated to all parliamentary parties for discussion.
- The debate will continue until June 21.
- The assembly will observe a break on June 22.
- On June 23, the House will discuss the necessary expenditures for the upcoming fiscal year.
- June 24 and 25 will be dedicated to discussions and voting on demands, grants, and cut motions.
- On June 26, the National Assembly will debate and vote on the Finance Bill, followed by formal approval of the bill on the same day.
- The session will conclude on June 27 with discussions and voting on supplementary grants and other budgetary matters.
The speaker’s office has clarified that any changes to the announced schedule will only be made with the speaker’s approval.
