Pakistan Budget 2025-26
- Abeera Marium Siddiqui
- June 10, 2025
- 4:45 pm
- 41
- Business
Finance Minister Muhammad Aurangzeb is all set to present the Pakistan Budget 2025 in the National Assembly session today. Speaker Sardar Ayaz Sadiq will chair the session. The budget is expected to offer some relief for the salaried group, along with key reforms driven by IMF conditions.
A day earlier, the finance minister shared the Pakistan Economic Survey 2024-2025. This survey outlines the country’s major economic gains in the outgoing fiscal year.
According to media reports, the government will present a Rs17.6 trillion budget. This is 6.7% lower than the previous year. The projected fiscal deficit is 4.8% of GDP, which is an improvement from last year’s target of 5.9%.
Tax Relief for Salaried Class
The budget includes long-awaited relief for salaried individuals. Sources reveal that new income tax slabs will apply starting July 1, 2025.
The tax-free slab up to Rs. 600,000 remains unchanged. For income between Rs. 600,000 and Rs. 1,200,000, the tax rate will be cut by 4%. Incomes between Rs. 1,200,000 and Rs. 2,200,000 will see a 3% reduction. If annual income falls between Rs. 2,200,000 and Rs. 3,200,000, the tax rate will drop by 2.5%. For income between Rs. 3,200,000 and Rs. 4,100,000, a 2% cut is expected. Those earning above Rs. 4,100,000 will get a 1.5% relief.
Officials suggest that the exemption limit may also be raised. A lower tax rate is likely for those earning around Rs. 100,000 per month.
Earlier this year, Finance Minister Aurangzeb acknowledged the heavy tax burden on salaried people. He hinted at upcoming relief. Former finance minister Asad Umar also emphasized the need to reduce unfair taxation on this group.
IMF Influence and Fiscal Reforms
The Pakistan Budget 2025 has been shaped under tight IMF guidance. To secure a new $7 billion IMF bailout, the government must meet several conditions.
These include expanding the tax base, enforcing agriculture income tax, and reducing subsidies to the industrial sector. The IMF has also demanded more taxes from retail, agriculture, and real estate sectors.
Facing limited options for new taxes, the government is changing its tone. Instead of saying “broadening the tax base,” officials now call it a push for “equity.” This means higher taxes on many goods and services, mainly to raise revenue.
The Federal Board of Revenue (FBR) still struggles to enforce existing tax laws. Meeting collection targets remains a challenge.
Key Budget Proposals for FY2025-26
The federal cabinet will meet today at 4:00 PM to approve the main proposals. Prime Minister Shehbaz Sharif will chair the meeting. Soon after, the National Assembly session will begin at 5:00 PM.
Here are the major proposals expected:
- A 10% salary increase for government employees
- Pension hikes between 7.5% and 10%
- 2.5% relief across all tax slabs
- Corporate income tax fixed at 2.5%
Under IMF pressure, new austerity steps are also on the table. These include a ban on new vehicle purchases for ministries. The government may also cap utility bills for all departments.
In addition, there’s a proposal to ban supplementary grants except in cases of natural disasters.
Debt servicing remains a major part of the budget. Rs7,503 billion is set aside for local debt and interest payments. Rs1,119 billion will go toward foreign debt.
Welfare and Development Measures
The quarterly cash stipend is set to rise above Rs13,500. It may increase to Rs14,500 by January 2026. The government expects to collect Rs. 19.3 trillion in revenue.
About 57.5% of FBR-collected tax will be transferred to the provinces. The provinces are expected to receive Rs8,107 billion under the NFC Award.
The government forecasts a current account deficit of 0.5% of GDP, which is about $2.1 billion.
Trade, Education, and Infrastructure
Exports are targeted at $35.3 billion, while imports may reach $65.2 billion. Service exports are projected at $9.6 billion. Meanwhile, remittances are expected to touch $39.4 billion. The combined export target stands at $44.9 billion.
To support industry and education, Rs250 million is proposed for 1,000 stitching units. A new Laptop Scheme and Pak-Bangladesh Friendship Scholarship Program will also launch.
Power generation is expected to rise by 2,800 MW. Most of this will come from solar net metering. The budget also focuses on ML-1 and the Karachi Circular Railway.
There is also an infrastructure package for AJK, GB, and merged districts.
Crackdown on Non-Filers
To boost tax compliance, the government will introduce tougher rules under the Income Tax Ordinance.
Non-filers may face bans on:
- Buying vehicles or property
- Investing in mutual funds or the stock market
- Foreign travel (except pilgrimage)
Additionally, a Rs600 deduction will apply to cash withdrawals over Rs50,000.
As Pakistan Budget 2025 rolls out today, all eyes remain on how these measures will impact the economy and the public—especially the salaried class.
