Pakistan Budget 2026–27: Salaries, Taxes, EV Policy and Major Fiscal Measures Revealed

Islamabad: The federal government is preparing Pakistan’s budget for fiscal year 2026–27, which is expected to bring a combination of salary relief, tax adjustments, and sector-wise policy changes as authorities aim to balance fiscal discipline with public relief.

According to Beyond Time News, officials plan to present the budget on June 12 with a total outlay projected at around Rs18 trillion. The financial plan focuses on revenue expansion, debt management, and targeted support for salaried and low-income groups.

Budget Size and Economic Direction

The government has structured the upcoming budget around a large-scale fiscal framework of nearly Rs18 trillion. Officials say the plan prioritizes economic stabilization while also attempting to reduce pressure on middle-income households.

At the same time, policymakers are working to maintain revenue growth as debt servicing and public expenditure continue to rise.

Salaried Class to Receive Tax Relief and Salary Increase

The government is preparing relief measures for salaried individuals. Authorities are considering a 10% increase in government salaries, while they also plan revisions to income tax slabs.

In particular, individuals earning between Rs1.2 million and Rs2.2 million annually may benefit from reduced tax rates. Policymakers are also reviewing broader adjustments to ease the burden on middle-income earners.

In addition, officials are evaluating the removal of the 10% surcharge on annual incomes above Rs10 million, which would reshape higher-income taxation.

Corporate Tax and Super Tax Outlook

While the government maintains current Corporate Income Tax rates, it continues reviewing possible changes to the Super Tax. Economic managers want to support investment activity without destabilizing overall revenue collection.

Meanwhile, authorities may introduce new taxation measures expected to generate around Rs220 billion to meet fiscal targets.

Revenue Targets Across Key Sectors

The budget outlines ambitious revenue goals across multiple streams. Officials have set the following projections:

Direct Taxes: Rs7.413 trillion
Sales Tax: Rs4.727 trillion
Customs Duty: Rs1.651 trillion
Federal Excise Duty: Rs1.043 trillion

In addition, the government expects Petroleum Development Levy (PDL) collections to reach Rs1.727 trillion. This figure reflects an increase of Rs259 billion compared to the previous fiscal year.

Similarly, officials project gas surcharge revenue at Rs151 billion.

Heavy Pressure from Debt Servicing

Debt repayments continue to dominate Pakistan’s fiscal structure. Authorities allocate a major share of the budget to interest payments and loan servicing.

Domestic debt servicing consumes Rs6.652 trillion
External debt servicing requires Rs1.107 trillion

Because of this pressure, policymakers continue to seek additional revenue streams while limiting non-essential spending.

Social Protection and Public Welfare Spending

The government allocates significant resources to social protection programs. Authorities increase the Benazir Income Support Programme (BISP) budget to Rs838 billion.

Moreover, officials plan to raise the quarterly BISP stipend from Rs13,000 to Rs14,500 to provide additional relief to low-income families.

Pensions also require heavy allocation, with spending expected to exceed Rs1.1 trillion.

Consumer Goods and Possible Price Relief

The government considers tax adjustments on several consumer goods. As a result, prices of items such as cosmetics, shampoo, soap, mascara, and face powder may decline.

These changes aim to ease household expenses while improving affordability in daily-use products.

Automobile Sector Faces Major Policy Shifts

The budget introduces significant changes in the automobile sector. Policymakers plan new environmental levies and revised import duties to reshape industry behavior.

Officials propose an Environmental Levy on luxury vehicles:

10% levy on vehicles with engine capacity between 2001cc and 3000cc
19.5% levy on vehicles above 3000cc

The government expects these measures to generate approximately Rs25.8 billion.

At the same time, officials reduce duties on imported raw materials to support local manufacturing. Import duty falls to 1%, while duties on auto parts decline from 10% to 5%. In addition, taxes on imported parts drop from 20% to 10%.

Manufacturers must now meet 62 safety and quality standards. The government also plans to withdraw tax benefits if companies fail to increase local production.

Vehicle Import and Hybrid Policy Changes

Policymakers also adjust taxes on imported and hybrid vehicles. Authorities reduce tax on imported SUVs and jeeps by 2 percentage points.

Over the next five years, the government plans to gradually reduce the rate from 50% to 40%.

However, locally manufactured hybrid vehicles may face higher taxation. The sales tax on these vehicles increases from 8.5% to 18%.

Climate Levy and Energy Sector Adjustments

The government increases the Climate Levy on petroleum products from Rs2.5 per litre to Rs5 per litre.

Officials link this decision to environmental reform goals and revenue requirements. The adjustment also reflects broader efforts to align fiscal policy with climate-related objectives.

Conclusion

Pakistan’s budget for 2026–27 combines relief measures for salaried groups with tighter taxation in energy and automobile sectors. While the government focuses on supporting low and middle-income households, rising debt obligations continue to shape fiscal priorities.

As policymakers finalize the details ahead of the June 12 presentation, the budget reflects an attempt to balance economic pressure with targeted public relief.

FAQs

What is the total size of Pakistan’s budget 2026–27?

The budget is expected to total around Rs18 trillion.

Will salaried people receive tax relief?

Yes, the government plans tax reductions for middle-income salaried individuals.

Will fuel and energy taxes increase?

Yes, the Climate Levy on petroleum products is expected to double.

Are vehicle prices expected to change?

Yes, luxury and hybrid vehicles may become more expensive due to new taxes.

When will the budget be presented?

The federal budget will be presented on June 12.

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