Key highlights of Pakistan budget for 2025-26

Pakistan government presented the budget for the fiscal year 2025-26 on Tuesday, targeting a modest 4.2% growth for FY26, compared to 2.7% expected in the outgoing FY25.

Business Recorder takes a look at some of the key highlights of the documents.

• Growth targeted at 4.2% in FY26

• Total outlay targeted at Rs17.6 trillion, down 7% or Rs1.3 trillion as compared to Rs18.9 trillion budgeted outlay of FY26

• Inflation expected at 7.5% in coming fiscal year

• Budget deficit proposed at 3.9% and primary surplus at 2.4% of gross domestic product (GDP)

• FBR revenue projected at Rs14.13 trillion, up 18.7% from outgoing fiscal year

• Federal non-tax revenue projected at Rs5.15 trillion

• Rs1 trillion allocated for Public Sector Development Programme (PSDP)

• Interest expense of Rs8.207 trillion for FY26 projected, down 8% YoY from FY25 level of Rs8.9 trillion

• Agriculture, industrial and services expected to post growth of 4.5%, 4.3% and 4%, respectively in FY26

• Rs2.55 trillion for defence spending

• Rs1.05 trillion for pensions

• Rs1.19 trillion for subsidies in energy and other sectors

• Rs716 billion for Benazir Income Support Programme (BISP), up by 21%

• Rs39.5 billion allocated for Higher Education Commission

• Rs4.8 billion for science and technology

• Super tax rates under section 4C proposed to be reduced by half a percentage point for income slabs between Rs200 million to Rs500 million against each slab respectively

• Govt removed FED of 7% and reduced Advance Tax by 150bps on immovable property

• No change in capital gain or dividend tax on stocks

• No change in FED on Fertilizer and Pesticide

• Govt proposed to bring down existing 5% slab to applicable on income between Rs60k-120k per month to 1%. While in subsequent 2 slabs rates (ppts) have reduced from 15% to 11%, and from 25% to 23%. The surcharge was reduced from 10% to 9%.

• 18% tax proposed on solar panels

• Reduced rate of 12.5% on autos below 850cc removed. Normal tax of 18% likely to be applied

• Carbon tax of Rs2.5/liter imposed on petrol, diesel and furnace oil for FY26