Pakistan’s National Assembly has passed the 2025–26 federal budget, introducing key tax reforms, increased allocations for defence and development, and relief measures aimed at boosting economic growth and controlling inflation.

Pakistan’s National Assembly approved the 2025-26  Federal Budget, incorporating several amendments that introduce additional revenue measures, on Thursday, 26 June 2025.

Key figures and targets

  • Total Budget: PKR 17.6 trillion
  • Current Expenditure: PKR 16.3 trillion
  • Defence: PKR 2.5 trillion
  • Federal Board of Revenue (FBR) Tax Target: PKR 14.1 trillion (19% rise)
  • Non-Tax Revenue: PKR 5.1 trillion
  • Economic Growth Target: 4.2%
  • Inflation Forecast: 7.5%

Tax reforms and anti-fraud initiatives

  1. Higher tax on mutual fund debt income: Tax rate on companies’ income from the debt portion of mutual funds raised from 25% to 29%.
  2. Increased tax on profits from government debt: Tax rate raised from 15% to 20% for corporations investing in government securities.
  3. Tax on high pension income: Pensioners earning more than PKR 10 million per year will pay 5% tax on the excess amount.
  4. Climate support levy: A new PKR 2.50 per litre levy on petrol and diesel to support climate-related initiatives.
  5. Tax on fuel-based vehicles: Vehicles running on petrol or diesel will be taxed at 1–3%, with revenue directed towards subsidising electric vehicles.
  6. Enhanced sales tax fraud enforcement: A three-member committee will approve arrest warrants in cases of sales tax fraud involving losses above PKR 50 million, with measures to prevent misuse of authority.

Major allocations and relief measures

  • Defence spending: PKR 2.55 trillion
  • Pensions: PKR 1.06 trillion
  • Subsidies (including electricity): PKR 1.19 trillion
  • Benazir income support programme (BISP): PKR 716 billion
  • Public sector development programme (PSDP): PKR 1 trillion

Development focus areas

  • Transport infrastructure: PKR 328 billion (largest PSDP share)
  • Water and dam projects:
    • Diamer Bhasha Dam: PKR 32.7 billion
    • Mohmand Dam: PKR 35.7 billion
    • K-IV Project: PKR 3.2 billion
    • Kalri Baghar Feeder Lining: PKR 10 billion
    • Indus Basin Telemetry System: PKR 4.4 billion
  • Education:
    • Higher Education Commission (HEC): PKR 39.5 billion (170 projects)
    • Other education programmes: PKR 18.5 billion
  • Agriculture: PKR 4 billion for 15 schemes (10 ongoing, 5 new)

Relief Measures for Citizens

  • Salary increase: 10%
  • Pension increase: 7%
  • Tax relief: Across all salaried income groups
  • Construction sector: Reduced withholding tax on property transactions

Earlier, Pakistan’s Ministry of Finance released the Federal Budget Documents for 2025-2026 on 10 June 2025, outlining major tax reforms aimed at increasing revenue and regulating digital commerce.