ISLAMABAD:
The federal government is expected to approve a development outlay of around Rs 1.126 billion for the financial year 2026-27 during the upcoming National Economic Council (NEC) meeting scheduled for tomorrow (Monday), according to finance ministry sources.
The meeting, chaired by Prime Minister Shehbaz Sharif, is likely to consider an increase of approximately Rs 200 billion. in the Public Sector Development Program (PSDP).
Federal ministers, chief ministers of all four provinces, Gilgit-Baltistan (GB), and the prime 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 2026-27 on June 10 with an estimated total outlay of Rs17.1 trillion.
A special federal cabinet meeting will be held before the budget presentation to approve the draft budget, including proposals for salary and pension increases for government employees. A 7% to 10% increase is under consideration, although allies are pushing for a 15% increase due to inflationary pressures.
The proposed economic targets include GDP growth of 4.1% and average inflation of 8.4%. The tax revenue target is set at Rs15.267 billion, while non-tax revenue is expected at Rs2.768 billion. The federal PSDP is expected to stand at Rs1.1 trillion.
Major expenditure includes Rs7.824 billion allocated for debt servicing and Rs2.665 billion for defence. The oil tax target has been proposed at Rs 1,727 billion.
The budget is also expected to introduce Rs220 billion in new taxes and may bring cryptocurrency transactions into the tax net with a proposed capital gains tax of between 10% and 30%. Amendments to the income tax regulation, including the addition of section 37C, are under consideration.
The government can withdraw tax exemptions for erstwhile tribal areas and include various food items — such as infant formula, ghee, cooking oil, tea, sugar and dry milk — under the Third Schedule, making publication of retail prices mandatory.
A flat tax scheme for traders is also proposed, applying a tax rate of 1% to companies with annual sales of up to Rs 200 million, along with a flat filing requirement of Rs 25,000. Businesses who register for the scheme will be exempt from audit.
Other proposals include scrapping tax exemptions on electric vehicles (CKD) from July 1, 2026 and doubling the climate subsidy tax on petroleum products from Rs2.5 to Rs5 per litre, potentially generating over Rs90 billion.
