The federal government is all set to unveil a Rs17.6 trillion budget for the fiscal year 2025-26 today (Tuesday), with a clear focus on tax collection target, employee relief, and boosting non-tax revenues to address the growing fiscal challenges.
Federal Minister for Finance Muhammad Aurangzeb will present the budget in the National Assembly session at 5pm, chaired by Speaker Ayaz Sadiq. The session will open with a recitation of the Holy Quran, Hadith, Naat, and the national anthem before the finance minister formally lays out the federal budget and Finance Bill 2025.
Big Relief for Lower Grade Employees, Pensioners
In a significant move aimed at easing inflationary pressure on salaried classes, the government is expected to grant up to 30% Disparity Allowance to employees from Grade 1 to 16. Meanwhile, pensions for retired government workers may see an increase of 5% to 7.5%. The merging of the ad hoc relief allowance into the basic pay structure is also under consideration—a welcome step for millions.
FBR’s Historic Tax Target
This year, the Federal Board of Revenue (FBR) has been handed a tax collection target of Rs14.13 trillion—a record high and a bold effort to stabilize the economy under IMF guidelines. Alongside, the government expects non-tax revenues to hover around Rs5.16 trillion, pushing gross revenue receipts to Rs19.298 trillion.
After fulfilling the constitutional requirement of revenue distribution, about Rs8.2 trillion will be transferred to provinces under the NFC Award. This leaves the federal government with a net revenue of Rs11.07 trillion, while projected expenditure is estimated at Rs17.573 trillion—prompting the need for budget deficit financing of Rs6 to 7 trillion.
Freelancers, Digital Creators, and Agriculture in Tax Net
A major shift in policy will see freelancers, digital content creators, and agricultural income brought into the tax net for the first time. This decision, long demanded by the IMF, means that earnings from freelancing platforms and social media content will now be taxed. Taxes on fertilizers, pesticides, and even bakery items are also being considered, potentially increasing the cost of essentials for consumers.
Budget Highlights: Industry Incentives & Trade Goals
While certain sectors brace for new levies, others will receive targeted relief. The federal excise duty on property transactions may be abolished, and customs duties on over 3,500 imported items are expected to be slashed by 2% to 3%—a move to support local industries and boost exports. The government is also reviewing a 5.5% GST hike on locally assembled cars up to 850cc, which could impact middle-class buyers.
The tax collection target is also linked to ambitious trade goals, with projected exports of $44.9 billion and imports touching $65.2 billion.
Defense, Development, and Budget Session Schedule
The defense budget is anticipated to rise by 18%, reaching Rs2.55 trillion due to increasing national security needs. Markup payments are set at Rs8.2 trillion, while federal subsidies and grants are budgeted at Rs1.186 trillion and Rs1.9 trillion, respectively. Development spending under the federal PSDP has been set at Rs1 trillion.
The National Assembly has released a detailed schedule for the budget debate:
June 10: Budget presentation
June 11-12: House in recess
June 13-21: General debate
June 22: Recess
June 23: Charged expenditures discussion
June 24-25: Demands for Grants and Cut Motions
June 26: Finance Bill approval
June 27: Supplementary grants and conclusion
The tax collection target for 2025-26 is clearly ambitious, but it reflects the government's resolve to boost revenue, support development, and meet IMF criteria — all while trying to ease the burden on the common citizen.
