National Assembly passes Rs17.57trn federal budget for FY2025-26
The National Assembly (NA) passed on Thursday the federal budget for the next fiscal year (2025-26), with a total outlay of Rs17.573 trillion, focusing on sustainable and inclusive economic growth, state-run Radio Pakistan reported.
A motion to this effect was moved by Minister for Finance Muhammad Aurangzeb.
The House passed the Finance Bill, 2025 with certain amendments, giving effect to the financial proposals of the federal government for the year beginning on the July 1, 2025.
Key highlights of Pakistan budget for 2025-26
The budget projects an economic growth rate of 4.2% and an inflation rate of 7.5% for the next financial year.
The net revenue receipts is estimated at Rs11.072 trillion. The Federal Board of Revenue (FBR) collections are estimated to be Rs14.131 trillion, 18.7% higher than the outgoing fiscal year (2024-25). Non-tax revenues will be Rs5.147 trillion.
As per the details, Rs2.550 trillion have been earmarked for defense, Rs1.055 trillion for the pension expenditures and Rs1.186 trillion for subsidy on electricity and other sectors.
The main relief features include 10% increase in salaries, 7% in pensions and tax relief for the salaried class across all slabs.
Moreover, Rs716 billion have been allocated for Benazir Income Support Programme.
The government has allocated Rs1 trillion for the Public Sector Development Programme (PSDP). The biggest amount of Rs328 billion has been earmarked for transport infrastructure projects.
The PSDP portfolio for next fiscal year has been aligned with the objectives of URAAN Pakistan, while priority has been attached to high impact, near completion, foreign funded projects and new initiatives of national importance, according to Radio Pakistan.
It reported that Rs32.7 billion have been earmarked for Diamer Bhasha, Rs35.7 billion for Mohmand Dam, Rs3.2 billion for K-IV, Rs10 billion for lining of Kalri Baghar Feeder and Rs4.4 billion for installation of telemetry system on Indus Basin System.
The Higher Education Commission will be given Rs39.5 billion for one hundred and seventy projects, and Rs18.5 billion have been set aside in the PSDP for various education projects.
Around Rs4 billion have been allocated for ten ongoing and five new schemes in the agriculture sector.
The budget encapsulates incentives for the construction industry, which include reduction in withholding tax on purchase of property, Radio Pakistan reported.
The House will now meet tomorrow at eleven in the morning.
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The RD has been removed on 554 PCT codes, and reduced on 595 codes, with the maximum RD rate lowered from 90 per cent to 50 per cent. The government has deleted 479 entries from Part-I, Part-III, and Part-VII of the Fifth Schedule. This move under the exemption regime review aims to eliminate distortion in the tax structure and minimise revenue loss. According to the amended finance bill 2025, two new sections were introduced to the Customs Act, including the creation of a Customs Command Fund under Section 225. Revenue generated from the auction of smuggled goods will be directed into the fund. The fund will be used for anti-smuggling operations, subject to approval from Federal Board of Revenue (FBR) and the Ministry of Finance. Under Section 226 of the Customs Act, the Customs Board will have the authority to designate any customs check post as a Digital Enforcement Station. The move will be formalised through a gazette notification, with associated rules and regulations also issued by the board. Similarly, withholding taxes under section 236K on purchase of property have also been proposed to be reduced. The proposed rate of withholding would be 1.5 per cent where fair market value does not exceed Rs50 million, two per cent where value exceeds Rs50 million but does not exceeds Rs100 million and 2.5 per cent where value exceeds Rs100 million. The withholding tax rate under section 236C for the sellers have been increased to 4.5 per cent, 5 per cent and 5.5 per cent respectively for the corresponding values. The bill includes major amendments to income tax, sales tax and customs legislation. Income tax exemptions have also been extended to pensions of former presidents and their widows, and to the Diamer-Bhasha and Mohmand Dam funds. 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The bill also sets the sales tax rate on solar panels at 10 per cent, and mandates the implementation of an electronic monitoring system for the import, transit and delivery of goods. Pakistan People's Party (PPP) Chairman Bilawal Bhutto-Zardari expressed strong support for the budget, citing the government's incorporation of several key PPP proposals. He welcomed a 20 per cent increase in the Benazir Income Support Programme (BISP) allocation, calling it a 'commendable step' that underscores the government's commitment to social protection. He also applauded the government's decision to raise the annual income tax exemption limit for salaried individuals from Rs600,000 to Rs1.2 million and reduce the sales tax on solar panels from 18 per cent to 10 per cent, following PPP objections. He welcomed amendments curbing the Federal Board of Revenue (FBR)'s arrest powers, which will now only apply to bailable offenses. 'We opposed the arrest powers being handed to the FBR, and the government accepted our objection,' he said. Despite opposition pressure to reject the budget, Bilawalaffirmed PPP's support, noting that the inclusion of party recommendations justified backing the bill. 'We are happy to support this budget because our demands have been accepted,' he said, thanking Prime Minister Sharif and Finance Minister Aurangzeb for their cooperation. Opposition amendments to the Sales Tax Act were rejected by the majority. However, the House approved a government-backed amendment to the Salaries and Allowances Act, aligning ministers' pay with that of parliamentarians. Speaking on the Finance Bill, PTI lawmakers strongly protested the imposition of taxes in the erstwhile Federally Administered Tribal Areas (FATA), the Provincially Administered Tribal Areas (PATA), and the Malakand Division. IqbalAfridi of PTI stated that levying taxes in ex-FATA is unjustified, as the region lacks basic facilities, roads, and industrial infrastructure. He, along with two other party MNAs and Federal Minister for Kashmir Affairs Amir Muqam, also met Prime Minister Shehbaz Sharif in his chamber to discuss the matter. However, despite repeated requests and protests from the opposition PTI members in the House, the government did not withdraw the tax imposed on ex-FATA and PATA areas, particularly the Malakand Division. PTI lawmakers also strongly objected to granting arrest powers to FBR officials, arguing that the government has effectively turned what they called the 'most corrupt' institution into a virtual police force, which they fear will now begin harassing citizens under the pretext of tax collection. Copyright Business Recorder, 2025
