Islamabad: The federal government on Friday presented a PKR 18.771 trillion federal budget for the fiscal year 2026-27, setting a GDP growth target of 4% and outlining a broad fiscal strategy focused on growth, revenue generation and targeted relief measures.
The total outlay reflects a 7% increase compared to the PKR 17.57 trillion budgeted expenditure in FY26. Inflation is projected at 8.2% for the upcoming fiscal year, while the Federal Board of Revenue (FBR) has been assigned a revenue target of PKR 15.26 trillion, marking an increase of over 8% from the previous year.
On the expenditure side, interest payments have been estimated at PKR 8.054 trillion, up 16%, while pension costs are projected at PKR 1.169 trillion, reflecting an 11% increase. Defence spending has been set at PKR 3 trillion, up 15.6%, and the Public Sector Development Programme (PSDP) has been allocated PKR 1 trillion.
Social and development allocations include PKR 838 billion for the Benazir Income Support Programme (BISP), PKR 25.1 billion for health projects, PKR 46 billion for education, and PKR 13 billion for governance initiatives.
Among key relief measures, the government abolished the surcharge on the salaried class and reduced the super tax by 2% on income exceeding PKR 500 million, excluding banks, fertiliser, and exploration and production companies. The export development surcharge of 0.25% has also been removed.
For the real estate sector, withholding tax (WHT) on property transactions has been significantly reduced. The WHT on property purchases by filers has been cut from 2.5% to 1.25%, while the rate on property sales has been reduced from 5.5% to 2.75%.
In addition, advance income tax and minimum tax on exports have been reduced from 2% to 1.25%, while WHT on international transactions via credit and debit cards has been cut from 5% to 0.5%.
On the housing front, the government has allocated PKR 71 billion for the Prime Minister Apna Ghar Programme, aimed at supporting affordable housing initiatives.
For the retail sector, a fixed tax scheme has been introduced under the Asaan framework for retailers with annual earnings of up to PKR 200 million, requiring either a minimum annual payment of PKR 25,000 or 1% of sales.
In addition, the minimum tax rate for distributors and wholesalers has been increased from 0.25% to 0.5%, while changes have also been made to Federal Excise Duty (FED), including new levies on SUVs (2,000–3,000cc) and petroleum-based solvents, along with revisions in duties on select industrial products.
The government said the budget aims to balance fiscal consolidation with targeted relief measures, while maintaining focus on stabilisation, compliance and gradual economic recovery in FY27.
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