Pakistan’s federal budget for 2026-27 carries a total outlay of approximately Rs18.77 trillion, introducing income tax relief for salaried individuals, extended IT sector benefits, and the elimination of super tax for smaller businesses.
Budget Size and Key Targets
Finance Minister Muhammad Aurangzeb presented the budget in the National Assembly on June 12, 2026, setting an FBR tax collection target of Rs15.264 trillion, a 17.6 percent increase over the previous year. The government has set its GDP growth target at 4 percent, with inflation targeted at 8.2 percent, down from double-digit readings recorded earlier in 2026.
Relief for the Salaried Class
Four income tax slabs have been revised downward, with the rate for annual income between Rs2.2 million and Rs3.2 million cut from 23 to 20 percent, and similar reductions across higher brackets up to Rs7 million. Government employees will also receive a 7 percent increase in salaries and pensions, though relief is concentrated in middle and upper-middle income brackets rather than the lowest earners.
Support for IT and Business Sectors
The preferential 0.25 percent final tax rate on IT export earnings, which was due to expire on June 30, 2026, has been extended for three more years, removing a major source of uncertainty for freelancers and software exporters. Super tax has been abolished for smaller businesses, while super tax on income above Rs50 crore has been reduced from 10 to 8 percent.
Defence and Social Spending
Defence spending is set at Rs3 trillion, reflecting an elevated security posture, while Rs838 billion has been allocated for the Benazir Income Support Programme, a 17 percent increase from the previous year. The budget also targets export growth to 32.8 billion dollars and import levels of 70 billion dollars for the fiscal year.
Frequently Asked Questions
What is the total size of Pakistan’s 2026-27 budget?
The federal budget has a total outlay of approximately Rs18.77 trillion.
Did salaried individuals get income tax relief?
Yes, four income tax slabs were reduced, though the relief is concentrated above median income levels.
Was the IT sector tax benefit extended?
Yes, the 0.25 percent final tax rate on IT export earnings was extended for three more years.
