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Budgets

Pakistan's Budget for Fiscal Year 2025-26 Unveiled: Key Takeaways and Statistics

Strategic Insights

— 1 min read

The government of Pakistan has unveiled its budget for fiscal year 2025-26, aiming for a GDP growth rate of 4.2 per cent and setting a tax collection target at Rs14,131 billion. The budget includes several key takeaways, particularly for the salaried class, property owners, and businesses.

Key Takeaways:

  • The budget provides a 10pc increase in salaries for government employees from Grade-1 to Grade-22.
  • Relief for the salaried class is provided through a reduction in tax rates, including a 10pc reduction in tax rates for people earning Rs2.2m-3.2m and a 2.5pc tax rate for people earning Rs600,000-Rs1.2 million.
  • Changes in pension structure include a 7pc increase in pension for retired government employees and a 5pc tax on those under 70 earning over Rs10m through pension income.
  • Property taxation changes include a 2.5pc reduction in withholding tax on the purchase of property and the abolition of federal excise duty of up to 7pc on the transfer of commercial properties.
  • Sales tax changes affect multiple items, including a 18pc tax levy on imported solar panels and a gradual sales tax on merged districts of Khyber Pakhtunkhwa and Balochistan.
  • The tax rate on profit on debt from mutual funds has been increased from 15pc to 20pc.
  • Notable measures include an increase in advance tax rate from 0.6pc to 1pc on cash withdrawals by non-filers and a carbon levy at Rs2.5 per litre on furnace oil, high speed diesel, and petrol.

Statistics:

  • The budget targets a GDP growth rate of 4.2 per cent.
  • The tax collection target for fiscal year 2025-26 is Rs14,131 billion.
  • The proposed tax rate on income from interest is increased from 15pc to 20pc.
  • The reduction in withholding tax on the purchase of property is 4pc to 2.5pc, 3.5pc to 2pc, and 3pc to 1.5pc.
  • The proposed tax credit on houses up to 10 marlas and flats of 2,000 square feet is to encourage mortgages for the provision of loans on low-cost housing.
  • The proposed reduction in stamp paper duty on the purchase of property in Islamabad is from 4pc to 1pc.

Sources:

  • Pakistani newspaper, date: June 2023, [original text omitted for brevity]
  • Speech of Finance Minister Muhammad Aurangzeb, National Assembly, date: June 2023, [original text omitted for brevity]

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