ISLAMABAD:
The federal government is expected to approve a development outlay of around Rs 1,126 billion for the fiscal year 2026-27 during the next meeting of the National Economic Council (NEC) scheduled for tomorrow (Monday), according to Finance Ministry sources.
The meeting, chaired by Prime Minister Shehbaz Sharif, is likely to consider an increase of about Rs 200 billion in the Public Sector Development Program (PSDP).
Federal ministers, chief ministers of the four provinces, Gilgit-Baltistan (GB) and chief minister of Azad Jammu and Kashmir (AJK) are expected to attend.
Sources said the Economic Survey for the outgoing fiscal year is likely to be presented on June 9, followed by the federal budget for 2026-2027 on June 10, with an estimated total outlay of Rs 17.1 trillion.
Before the budget presentation, a special meeting of the federal cabinet will be held to approve the draft budget, including proposals for salary and pension increases for government employees. An increase of 7% to 10% is being considered, 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 reach Rp1.1 trillion.
Major expenditures include Rs 7,824 billion allocated for debt service and Rs 2,665 billion for defence. The target of petroleum tax has been proposed at Rs 1,727 crore.
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 between 10% and 30%. Amendments to the Income Tax Ordinance, including the addition of section 37C, are being considered.
The government may withdraw tax exemptions for erstwhile tribal areas and include various food products (such as infant formula, ghee, cooking oil, tea, sugar and milk powder) in the third schedule, making printing of retail prices mandatory.
A flat tax system for traders is also proposed, levying a 1% tax rate on businesses with annual sales of up to Rs 200 million, along with a fixed filing requirement of Rs 25,000. Merchants who choose to participate in the plan would be exempt from audits.
Other proposals include ending tax exemptions for completely knocked down (CKD) EV kits from July 1, 2026 and doubling the climate support tax on petroleum products from Rs 2.5 to Rs 5 per liter, which could generate more than Rs 90 billion.
