Finance Minister Muhammad Aurangzeb will unveil the annual federal budget today, expected to provide some relief to the salaried group, during the National Assembly session chaired by Speaker Sardar Ayaz Sadiq.
Aurganzeb, in a press conference yesterday, launched the Pakistan Economic Survey 2024-2025, a pre-budget document that contains details of major socio-economic achievements during the outgoing fiscal year.
Media reports say the government is likely to present a Rs17.6 trillion budget for the fiscal year beginning July 1, down 6.7 per cent from this fiscal year. It has projected a fiscal deficit of 4.8pc of GDP, against a targeted 5.9pc deficit in 2024-25, the reports say.
The budget for FY26 is expected to prioritise expanding the tax base, enforcing agriculture income tax laws, and reducing government subsidies to industry, to meet the terms of a $7 billion IMF bailout.
The IMF has urged Pakistan to widen the tax base through reforms, which include taxing agriculture, retail, and real estate.
The session will open with recitation, followed by the finance minister presenting the federal budget. Aurangzeb is also expected to present other documents, including the Finance Bill 2025.
Facing limited room for fresh tax measures, the government has resorted to rebranding taxation — shifting from “broadening the tax base” to pursuing “equity” — in an effort to justify higher taxes on lower-income segments. This shift means lower tax rates on a wide range of goods and services will be raised, a move the Federal Board of Revenue (FBR) anticipates will generate maximum revenue.
The FBR faces significant challenges in meeting its tax collection targets, as doubts persist over its ability to enforce existing tax laws effectively.
Meanwhile, some relief is expected for the salaried class in lower tax slabs. Officials indicate that the exemption limit may be further raised, alongside a lower tax rate for individuals earning around Rs100,000 per month.
According to former finance minister, Asad Umar, quoted in a report by Dawn, “the fundamental question for the government at this point is: how to increase the revenue and what expenditures to cut”.
“Last year’s budget placed a crushing burden on the salaried class. This budget must include a reversal of that unfair taxation,” he added.
In February earlier this year, Finance Minister Aurangzeb admitted that there was a massive tax burden on the salaried class and indicated that the government may provide some relief to them.
