The federal government is set to present the federal budget for fiscal year 2026-27, with a total outlay exceeding Rs17.5 trillion, on June 12. The budget is expected to include increases in salaries and pensions for government employees, along with tax relief worth up to Rs50 billion. Despite the proposed relief measures, the tax revenue target is likely to be set at Rs15.267 trillion.
According to reports, a special meeting of the federal cabinet, chaired by Prime Minister Shehbaz Sharif, will be held before the budget presentation to approve the draft budget and proposals regarding salary and pension increases for government employees.
Sources said the government has decided not to change taxes imposed on solar panels, stationery items, and the stock market. A proposal to increase the sales tax on solar panels from 10 percent to 18 percent has reportedly been withdrawn, while a proposed increase in sales tax on stationery products has also been excluded from the budget.
The budget is expected to raise the sales tax on imported electric vehicles (EVs) to 25 percent, while maintaining current tax rates on hybrid vehicles. At the same time, tax incentives are likely to be offered for environmentally friendly electric vehicles, whereas a carbon levy may be imposed on vehicles running on conventional fuels.
As a result, larger conventional vehicles could become more expensive, while locally manufactured electric vehicles may become cheaper. Tax rates on hybrid vehicles are expected to remain unchanged.
To promote domestic EV production, the government is considering reducing customs duty on motors, batteries, and other EV components to 1 percent. A 1 percent sales tax has also been recommended, along with complete exemptions from federal excise duty, capital value tax, and withholding tax.
According to sources, the government plans to collect Rs1.727 trillion through petroleum levy in the next fiscal year. The proposed allocation for debt servicing stands at Rs7.824 trillion, while nearly Rs3 trillion has been earmarked for defence spending.
Pakistan’s trade deficit is projected to exceed $37 billion next year, with exports targeted at $32.8 billion and imports estimated at $70 billion.
Also Read: Budget 2026: Heavy tax hike expected on EVs
