Finance Minister Muhammad Aurangzeb on Saturday said Pakistan’s economy was moving steadily from stabilization to growth, as he expanded the federal budget proposed yesterday (Friday) for the upcoming fiscal year 2026-27.
“The economy is going in the right direction […] “We will now move from economic stability to growth,” Aurangzeb said at a post-budget press conference, flanked by Minister of State for Finance and Revenue Bilal Azhar Kayani, Information Minister Attaullah Tarar and Federal Board of Revenue chairman Rashid Mahmood Langrial.
The finance minister said the government had worked to strengthen both the fiscal and export frameworks in the budget, adding that significant economic progress had been made during the outgoing fiscal year. He said the available fiscal space had been used in the best possible way.
Aurangzeb announced that Rs 70 billion in additional subsidies had been allocated to enable exporters to access financing at a reduced rate of 4.5%, a measure aimed at boosting export competitiveness and improving sectoral liquidity.
He confirmed that the super tax had been abolished for companies earning more than Rs 500 million, describing it as a significant step.
He added that when the budget was presented before Prime Minister Shehbaz Sharif and the federal cabinet, a specific directive was issued to abolish super tax for all exporters, a move he said he would include in his final speech at the end of the budget session.
Advance tax has also been abolished as part of efforts to create an enabling environment for export-led growth, he said.
Agriculture
On the agriculture front, Aurangzeb said customs duty, additional customs duty and statutory duty on import of farm machinery had been reduced to zero to facilitate modernization of the sector.
Agricultural credit had grown by 15% and the total volume now exceeds Rs 2 trillion, he added.
He said the Zarkhez-e-Asaan scheme was progressing better and more effectively. He gave firm assurances that small farmers would not be asked to mortgage their homes to access agricultural support or finance.
The Prime Minister’s Youth Program has been allocated Rs 262 billion, of which Rs 125 billion has been earmarked specifically for agriculture.
Salaried class and construction.
Aurangzeb said the government had prioritized relief for low-income salaried workers. The 5% tax has been reduced to 1%, while the 15% tax has been reduced to 13%. He said positive feedback had been received on measures relating to higher pay levels and surcharge adjustments.
Taxes have been reduced in the construction sector to encourage activity and investment, he added.
The Final Tax Regime (RFT) for the IT industry and the self-employed is maintained, guaranteeing continuity and stability in the fiscal framework of the sector.
Energy and provinces
The finance minister acknowledged that pressure on energy infrastructure remained a challenge.
He said the oil import bill had initially risen by $1 billion but had since been contained to around $500 million. He added that some pressure on energy infrastructure would also persist into the next fiscal year.
Aurangzeb expressed gratitude to the provinces for their support to the federal government and highlighted their cooperation in the budget process. This mechanism, he noted, would continue for the next three fiscal years.
He said a new and modern automated tax system was being introduced and the tax network would be expanded in the coming period.
‘The budget is public’
For his part, Minister of State for Finance and Revenue Bilal Azhar Kayani described the budget as one that belongs to the public, industrialists and those who want to build their houses. “This is a budget that reduces the economic burden on people,” he said.
Kayani said the government’s first priority had been to reduce the burden on the salaried class, adding that steps had been taken in consultation with the business community to ease the overall tax burden.
He said the demands of the export industry had been kept at the forefront while designing the budget’s incentive framework.
He outlined the revised tax structure for salaried individuals: those earning up to Rs 600,000 a year pay zero tax; those earning between 600,000 and 1.2 million rupees a year pay 1%; and those earning between Rs 1.2 and Rs 2.2 million a year saw their taxes reduced by 11% last year.
He added that a person earning Rs 100,000 a month now pays only Rs 500 in monthly taxes, while someone earning Rs 200,000 a month pays Rs 13,500.
“This is a budget for the salaried class, industrialists, exporters and the construction sector,” Kayani added.
This is a developing story and is being updated with more details.
