ISLAMABAD:
The federal government is expected to approve a development outlay of around Rs 1,126 billion for the financial year 2026-27 at the next National Economic Council (NEC) meeting scheduled for tomorrow (Monday), according to Finance Ministry sources.
The meeting, chaired by Prime Minister Shehbaz Sharif, is expected to consider an increase of around Rs200 billion in the Public Sector Development Program (PSDP).
Federal ministers, chief ministers of the four provinces, Gilgit-Baltistan (GB) and the chief minister of Azad Jammu and Kashmir (AJK) are expected to attend.
Sources said the economic survey for the upcoming fiscal year is likely to be presented on June 9, followed by the federal budget for 2026-27 on June 10, with an estimated total outlay of Rs 17.1 trillion.
A special meeting of the federal cabinet will be held before the budget presentation to approve the proposed budget, including proposals to increase salaries and pensions of government employees. A 7-10% increase is under consideration, although allied parties are pushing for a 15% increase due to inflationary pressures.
The proposed economic targets include a GDP growth rate of 4.1% and an average inflation rate of 8.4%. The tax revenue target is set at Rs 15,267 billion, while non-tax revenue is projected at Rs 2,768 billion. The federal PSDP is expected to amount to Rs1.1 trillion.
The main expenditures include 7,824 billion rupees allocated for debt servicing and 2,665 billion rupees for defense. The oil tax target has been proposed at Rs 1,727 billion.
The budget is also expected to introduce 220 billion rupees in new taxes and could bring cryptocurrency transactions into the tax net, with a proposed capital gains tax ranging from 10% to 30%. Amendments to the Income Tax Ordinance, including the addition of section 37C, are under consideration.
The government may remove tax exemptions for erstwhile tribal areas and include various food items, such as infant formula, ghee, cooking oil, tea, sugar and milk powder, in the Third Schedule, thereby making printing of retail prices mandatory.
A flat tax regime for traders is also proposed, applying a tax rate of 1% to businesses with an annual turnover of up to Rs 200 million, along with a flat reporting requirement of Rs 25,000. Traders who join the system would be exempt from audits.
Other proposals include ending tax exemptions on completely knocked down (CKD) electric vehicle kits from July 1, 2026 and doubling the climate support levy on petroleum products from Rs 2.5 to Rs 5 per litre, potentially generating over Rs 90 billion.
