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Pakistan's Rs7.1b Farm Storage Fund Heavily Outweighed by 35% Crop Wastage Nightmare
Pakistan

Pakistan’s Rs7.1b Farm Storage Fund Heavily Outweighed by 35% Crop Wastage Nightmare

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KARACHI: The federal government’s newly announced Budget 2026-27 has sparked intense debate by allocating a meager Rs7.1 billion for agricultural storage infrastructure. This small fund stands in stark contrast to a staggering national crisis where wheat losses alone drain more than Rs140 billion from the economy every single year. A Deepening Infrastructure Crisis Experts argue that the small allocation reveals a fundamental misunderstanding in Islamabad regarding the true scale of Pakistan’s agricultural vulnerabilities. The domestic supply chain remains crippled by outdated warehousing, insufficient cold-chain facilities, poor handling practices, and severe pest damage. While public procurement systems offer some protection for wheat, other critical crops like maize, pulses, fruits, and vegetables are left heavily exposed. Data shows that combined pre-harvest and post-harvest wastage wipes out approximately 35% of overall agricultural output across various crop sectors. The Horticulture Bottleneck The challenge is felt most severely in horticulture, where the lack of modern preservation options directly impacts national food security. Pakistan produces nearly 30 million tonnes of fruits and vegetables annually, yet national cold-storage capacity remains under one million tonnes. Even grain storage falls short by up to 500,000 tonnes, preventing the country from safely preserving its annual 29.6 million tonne wheat yields. Industry leaders emphasize that without scaling up these storage systems, the country will continue to throw away billions in valuable food resources.

Pakistan Economy Shows Signs of Recovery Under IMF Programme Despite Structural Challenges
Pakistan

Pakistan Economy Shows Signs of Recovery Under IMF Programme Despite Structural Challenges

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Pakistan’s economy has shown signs of stability under the International Monetary Fund (IMF) programme, with improvements in foreign exchange reserves, inflation and fiscal management. However, experts believe long-term growth and debt sustainability will depend on deep structural reforms and stronger exports. Over the past several years, Pakistan has repeatedly relied on IMF support to overcome balance-of-payments crises, rising inflation and pressure on foreign exchange reserves. The latest programme has helped restore investor confidence and improve key economic indicators, but major challenges remain. Foreign Exchange Reserves Recover From Crisis Levels One of the biggest achievements under the IMF-backed programme has been the improvement in Pakistan’s external position. According to the State Bank of Pakistan (SBP), foreign exchange reserves have recovered significantly compared with the levels seen during the peak of the economic crisis. The improvement came through IMF disbursements, financial support from friendly countries, stronger remittances and tighter import controls. Higher reserves have helped stabilise the Pakistani rupee and eased fears of an immediate external financing crisis. Although reserves have improved, economists say they still remain below ideal levels and require further strengthening. Inflation Falls After Reaching Historic Highs Pakistan has also made progress in controlling inflation. After hitting record levels in 2023, inflation gradually declined due to monetary tightening, fiscal discipline and favourable base effects. Recent figures from the Pakistan Bureau of Statistics (PBS) show that headline inflation has returned to single digits, providing relief to consumers and businesses. Lower inflation has improved purchasing power and created space for the State Bank to gradually reduce interest rates. However, policymakers remain cautious because underlying inflationary pressures continue to pose risks. Government Focuses on Fiscal Discipline Fiscal consolidation remains one of the main pillars of the IMF programme. Successive governments have struggled with large budget deficits caused by weak tax collection and high expenditures. Under the current arrangement, Pakistan introduced measures to increase revenue, reduce untargeted subsidies and improve financial management. The Federal Board of Revenue (FBR) has recorded growth in tax collection, although authorities continue to face difficulties in meeting ambitious targets. Economists say expanding the tax base remains essential because Pakistan’s tax-to-GDP ratio remains lower than many countries in the region. Energy Sector Reforms Aim to Reduce Circular Debt The energy sector remains one of Pakistan’s biggest economic challenges. Official estimates show that circular debt in the power sector has exceeded Rs2.5 trillion, creating a heavy burden on public finances. IMF-supported reforms have focused on improving cost recovery through tariff adjustments and better governance. While these measures are intended to strengthen the sector, they have also increased electricity prices for households and businesses. As a result, energy reforms continue to face political and public resistance. Economic Growth Remains Modest Despite improvements in macroeconomic stability, economic growth remains slow. High interest rates during much of the IMF programme period increased borrowing costs for businesses. At the same time, fiscal tightening reduced government spending and weakened domestic demand. As a result, economic expansion has remained below the level needed to meet Pakistan’s development requirements. Experts say balancing economic growth with fiscal discipline represents one of the biggest challenges for policymakers. Debt Burden Continues to Pose Risks According to Ministry of Finance data, Pakistan’s total external debt and liabilities exceed $125 billion. Annual debt servicing obligations remain high and require continuous access to external financing. Although IMF support has eased immediate pressures, economists warn that long-term debt sustainability depends on increasing exports and reducing reliance on borrowing. Without improvements in productivity and competitiveness, debt-related vulnerabilities could return. Exports and Investment Need Further Support Pakistan’s export base remains narrow despite some growth in information technology and agricultural exports. Merchandise exports have struggled to grow consistently, while imports remain high because of dependence on energy and industrial inputs. This imbalance continues to pressure the country’s external account. Authorities are looking to initiatives such as the Special Investment Facilitation Council (SIFC) to attract local and foreign investment. However, investors still highlight concerns over policy consistency, regulatory hurdles and governance issues. Analysts believe creating a transparent and predictable business environment will be crucial for boosting industrial growth and employment. Social Impact of Reforms Sparks Debate The IMF-backed reforms have also generated debate over their impact on ordinary citizens. Subsidy reductions and higher utility tariffs have increased the financial burden on households already dealing with high living costs. Although programmes such as the Benazir Income Support Programme (BISP) have expanded, concerns remain about protecting vulnerable communities. Experts say economic reforms must be accompanied by stronger social protection measures. Pakistan’s Economic Outlook Remains Cautiously Optimistic Despite lingering risks, Pakistan’s economic outlook appears cautiously optimistic. Analysts believe that if reform momentum continues, inflation remains under control and external financing stays available, the country could gradually move from economic stabilisation toward sustainable recovery. However, they warn that long-term prosperity will depend on structural reforms, export growth and improvements in productivity.

Lucky Investments and DIB Pakistan Collaborate to Expand Islamic Investing Nationwide
Pakistan

Lucky Investments and DIB Pakistan Collaborate to Expand Islamic Investing Nationwide

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Karachi, June 15, 2026: Lucky Investments Limited (Lucky Investments), one of Pakistan’s fastest-growing Islamic Asset Management Companies, and DIB Pakistan a subsidiary of Dubai Islamic Bank UAE, have entered into a strategic collaboration to broaden access to Shariah-compliant investment solutions across Pakistan. As per the signed MOU in place, DIB Pakistan will distribute Lucky Investments’ Islamic mutual funds and pension funds through its nationwide branch network, enabling customers to conveniently access professionally managed Shariah-compliant investment products through one of Pakistan’s leading Islamic banking franchises. This initiative will enhance investment solutions across DIB Pakistan’s customer touchpoints – further strengthening ’ commitment to promoting Islamic savings, wealth creation, and retirement planning in Pakistan. The collaboration brings together the investment management expertise of Lucky Investments and the extensive banking reach of DIB Pakistan, which serves more than 556,596 customers through a network of over 300 branches across 100 cities nationwide. Commenting on the partnership, Mohammad Shoaib, CFA, Chief Executive Officer, Lucky Investments Limited, said: “We are delighted to collaborate with DIB Pakistan, one of the most respected names in ethical banking globally. This alliance represents an important milestone in our mission to make high-quality Shariah-compliant investment solutions accessible to a wider segment of Pakistani investors. We aim to deepen financial inclusion, encourage long-term savings, and contribute to the continued growth of Pakistan’s Islamic finance industry.” Speaking on the occasion, Muhammad Ali Gulfaraz, Chief Executive Officer, DIB Pakistan, said: “At DIB Pakistan, we are committed to expanding access to ethical financial solutions. Our collaboration with Lucky Investments strengthens that commitment – bringing professionally managed Islamic investment and retirement solutions directly to our customers through our branch network. Together, we aim to create meaningful pathways to long-term financial security.” This initiative reflects the growing convergence between Islamic banking and Islamic asset management in Pakistan and supports the shared vision of both institutions to advance ethical, transparent, and Shariah-compliant financial solutions for individuals and families nationwide.

No More Super Tax, Cheaper Inputs, IT Relief: Aurangzeb Breaks Down the Budget
Pakistan

No More Super Tax, Cheaper Inputs, IT Relief: Aurangzeb Breaks Down the Budget

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Finance Minister Muhammad Aurangzeb addressed a press conference in Islamabad to elaborate on the proposed budget for FY2026-27, highlighting measures aimed at export-led growth, tax relief, and tariff rationalisation. Progress Toward Economic Growth Aurangzeb opened his briefing by stating that the budget reflected “significant progress” in the direction of economic growth discussed earlier. He noted that the government made comprehensive efforts to create an enabling environment for export-led growth, which included the abolishment of the advance tax. Super Tax Abolished for Exporters The minister stressed the decision to abolish the super tax for businesses earning more than Rs500 million, describing it as a “very meaningful direction of travel.” On the directives of Prime Minister Shehbaz Sharif, he extended the proposal further to cover all exporters. Financing and Subsidies Aurangzeb drew attention to the financing dimension of the budget, beyond taxation alone. An additional subsidy of Rs70 billion was proposed to elevate the ongoing refinancing scheme to a higher level of support. Tariff Rationalisation on Track On tariffs, the minister noted the government entered the second year of its five-year plan to reduce the cost of intermediate goods and raw materials. He underlined the need to narrow the trade deficit for goods while acknowledging that services exports, particularly in the IT sector, grew in strategic importance. FTR Maintained for IT and Freelancers The government announced the continuation of the 0.25 per cent Final Tax Regime (FTR) in line with proposals from the IT industry, freelancers, and PASHA. Relief for Salaried Class Aurangzeb emphasised that the budget targeted relief for lower-income salaried workers. Tax slabs were revised downward — from 5 per cent to 1 per cent and from 15 per cent to 13 per cent for the relevant income brackets. Budget Presented Before National Assembly On Friday, Aurangzeb presented the financial plan before the National Assembly. Key announcements included a three-year freeze on provincial transfers, with resources reallocated toward security needs and relief for salaried workers, corporates, the real estate sector, and exporters. In his third budget — and the fifth under the current major coalition — the minister proposed taxes on social media earnings, a fixed tax scheme for small traders and shopkeepers, a higher minimum tax rate for wholesalers and retailers, incentives for small electric vehicles and bikes, and restrictions on luxury electric vehicles.

Budget 2026-27: Govt Cuts Withholding Tax on Card Transactions by 90%
Pakistan

Budget 2026-27: Govt Cuts Withholding Tax on Card Transactions by 90%

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Finance Minister Aurangzeb Announces Rate Cut From 5% to 0.5% to Boost Economic Documentation The government has proposed a 90% reduction in withholding tax on international credit and debit card transactions in Budget 2026-27. Finance Minister Muhammad Aurangzeb announced the cut while presenting the federal budget on Friday. The rate will drop from 5% to 0.5%. Existing Tax Pushed Users Towards Informal Channels The current 5% withholding tax applies to every overseas transaction made through bank-issued cards in Pakistan. Aurangzeb said this high rate had pushed people towards informal channels for transferring funds abroad. The government wants to reverse this trend. New Rate Brings Cards in Line With Routine Transactions The proposed 0.5% rate aligns international card transactions with standard financial transaction levels. The minister said the cut will discourage the use of informal transfer methods and bring more transactions into the formal economy. Move to Strengthen Formal Financial System Aurangzeb said the measure directly supports the government’s broader goal of documenting the economy. It will strengthen formal financial channels and encourage more Pakistanis to use bank-issued cards for overseas spending. Significant Relief for Online Consumers If parliament approves the proposal, online consumers and international travellers will receive significant relief. The 90% tax reduction lowers the cost of every foreign card transaction and makes formal banking a more attractive option for everyday users.

Pakistan Sets 4% GDP Growth Target for FY 2026-27 Amid Recovery Signals
Pakistan

Pakistan Sets 4% GDP Growth Target for FY 2026-27 Amid Recovery Signals

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Islamabad: The government has announced a 4% GDP growth target for the fiscal year 2026-27, marking a modest uptick from the 3.7% growth recorded in the outgoing year. This projection comes as part of the Annual Plan 2026-27, released on Friday, highlighting resilience despite challenges like monsoon floods and geopolitical tensions in the Middle East. Sectoral Drivers of Economic Expansion Fiscal Discipline and Development Priorities The overall 4% growth in FY27 is expected to be supported by an increase of 3.6% in the agriculture sector, 4.5% in industry, and 4.2% in services. In comparison, FY26 saw agriculture grow by 2.9%, industry by 3.5%, and services by 4.1%. Officials noted that the economy maintained an upward trajectory in FY 2025-26 despite external shocks. Agriculture remains a cornerstone of Pakistan’s economy, employing a large portion of the workforce and contributing significantly to exports. The targeted 3.6% growth reflects optimism around improved irrigation, better seed varieties, and recovery from recent floods. However, experts caution that climate variability could pose risks if monsoon patterns remain erratic. Industry is projected to expand at 4.5%, driven by potential improvements in manufacturing and construction. Enhanced business confidence, supported by political stability and macroeconomic measures, could attract more investment in this sector. Large-scale manufacturing and small and medium enterprises (SMEs) are expected to play key roles. Services, which already posted 4.1% growth last year, are slated for 4.2% expansion. This includes wholesale and retail trade, transport, finance, and IT-related activities. Digital economy initiatives and financial inclusion efforts may further bolster this sector. “The economy remained on an upward growth trajectory (in FY 2025-26), despite monsoon floods and the Middle East conflict,” the Annual Plan stated. This resilience underscores the effectiveness of recent stabilization policies. Inflation is forecast to average 8.2% in FY27, up from 7.1% in FY26. Rising fuel costs linked to Middle East tensions and external supply shocks are cited as primary reasons. The government aims to manage this through targeted subsidies and monetary policy coordination with the State Bank of Pakistan. Investment-to-GDP ratio is targeted at 15%, up from previous levels, fueled by better business climate and stability. National savings are projected at 14.3% of GDP, benefiting from financial sector deepening and a stable current account. The total national development outlay for FY27 stands at Rs3.675 trillion. Federal ministries and divisions will receive Rs1 trillion, while provincial Annual Development Plans (ADPs) get Rs2.224 trillion. Federal state-owned enterprises are allocated Rs451 billion. This is lower than the Rs4.224 trillion approved for FY26, reflecting a more cautious fiscal approach amid resource constraints. Sector-wise PSDP Breakdown Infrastructure projects will receive the largest share at Rs603 billion, critical for roads, energy, and water resources. Social sector allocation is Rs181 billion, focusing on health and education. Governance gets Rs13 billion, science and IT Rs41 billion, and special areas including AJK, Gilgit-Baltistan, and merged districts see combined support of Rs145 billion. Production and other sectors receive smaller portions. Analysts view the plan as balanced but stress the need for efficient execution. Completion of ongoing projects rather than new launches is expected to maximize impact. Challenges persist, including external risks like oil price volatility. Sustained reforms in taxation, energy, and governance will be vital to achieve these targets. Private sector participation is encouraged through improved ease of doing business. Foreign direct investment inflows could accelerate if political stability holds. Overall, the FY27 plan signals continuity in recovery while addressing structural issues. Success will depend on implementation and global economic conditions.

Budget 2026-27 Reaction: FPCCI Questions Unrealistic Tax Target and Missing Relief for Industry
Pakistan

Budget 2026-27 Reaction: FPCCI Questions Unrealistic Tax Target and Missing Relief for Industry

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The Budget 2026-27 Reaction from Pakistan’s business community has been mixed, but one message stood out clearly from the Federation of Pakistan Chambers of Commerce and Industry. Senior Vice President Saquib Fayyaz Magoon praised a handful of measures while warning that the federal government’s ambitious revenue expectations may prove detached from economic realities. Addressing a press conference in Karachi, Magoon described the government’s Rs15.2 trillion tax collection target as unrealistic and cautioned that excessive reliance on taxation without meaningful industrial relief could place additional pressure on businesses already struggling with high operating costs. Budget 2026-27 Reaction Questions Rs15.2 Trillion Tax Goal The government’s decision to set a tax collection target of Rs15.2 trillion has become one of the most debated aspects of the federal budget. According to FPCCI, achieving such a target would be extremely challenging under prevailing economic conditions. Businesses continue to face slowing demand, elevated financing costs and persistent uncertainty. Without broadening the tax base and improving compliance mechanisms, industry representatives fear that authorities may resort to squeezing already documented sectors. The criticism reflects a broader concern that unrealistic targets often lead to aggressive revenue measures later in the fiscal year, creating unpredictability for investors and taxpayers alike. Housing and Development Measures Receive Support Despite reservations, FPCCI welcomed several initiatives announced in the budget. The allocation of Rs71 billion for the Apna Ghar Housing Scheme and the construction sector was described as a positive step. The housing industry has long been viewed as a catalyst for economic activity because it stimulates demand across multiple sectors including cement, steel, paint, electrical goods and labor-intensive services. Similarly, increased allocations for development projects and higher education received appreciation from the business community. Investment in infrastructure and education is often seen as critical for long-term economic competitiveness. Export Financing Gets a Boost but Major Demands Ignored Under the budget, Rs88 billion has been allocated for export refinance facilities, a move welcomed by exporters. However, FPCCI argued that the government stopped short of addressing exporters’ core concerns. Budget 2026-27 Reaction Highlights Exporters’ Frustration Exporters had strongly advocated for the introduction of a fixed tax regime to simplify compliance and enhance predictability. The government did not accept this proposal. More importantly, no meaningful announcement was made to reduce industrial production costs. Businesses maintain that Pakistan cannot significantly expand exports if manufacturers continue to bear expensive energy tariffs and rising input costs. Without competitive production expenses, exporters fear losing ground to regional rivals. No Energy Relief Raises Serious Concerns One of the biggest disappointments highlighted during the press conference was the absence of energy price relief. Industry stakeholders had expected measures aimed at reducing electricity and gas costs. Instead, the budget remained silent on this issue. Given that energy constitutes a major component of industrial expenditure, the omission has intensified concerns over Pakistan’s ability to boost manufacturing and exports. For many businesses, lower energy prices were considered essential rather than optional. Retailers and Remittances Left Out FPCCI also criticized the lack of incentives for overseas Pakistanis sending remittances. Despite remittances serving as a vital source of foreign exchange, the budget introduced no fresh measures to encourage inflows through formal channels. At the same time, concerns were raised over increased withholding tax rates affecting retailers. According to the chamber, retailers are already difficult to bring into the tax net. Raising withholding taxes without addressing structural issues may increase compliance burdens without achieving the desired documentation objectives. Debit Card Tax Withdrawal Encourages Documentation Among the few widely appreciated decisions was the removal of the five percent deduction previously imposed on debit card transactions. Business leaders believe this step will encourage digital payments and strengthen efforts to promote a documented economy. Greater reliance on formal financial channels could improve transparency and reduce cash-based transactions over time. Final Verdict on Budget 2026-27 Reaction Saquib Fayyaz Magoon concluded that FPCCI would conduct a detailed review of the Finance Bill before presenting its comprehensive recommendations. For now, the business community’s verdict remains cautious. While the budget contains encouraging allocations for housing, development and export financing, the absence of energy relief, the rejection of exporters’ key demands and the ambitious tax target have left many questioning whether the Budget 2026-27 can truly deliver the economic momentum Pakistan urgently needs.

Budget 2026 Reaction: Zubair Motiwala Questions Government's Growth Strategy and Tax Targets
Pakistan

Budget 2026 Reaction: Zubair Motiwala Questions Government’s Growth Strategy and Tax Targets

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Budget 2026 Reaction from Pakistan’s business community has exposed a widening gap between government promises and industry expectations. Businessmen Group Chairman and former Chief Executive of the Trade Development Authority of Pakistan, Zubair Motiwala, delivered a blunt assessment of the federal budget, arguing that while a few measures deserve appreciation, the overall document fails to provide a convincing roadmap for economic revival. Addressing a press conference, Motiwala questioned whether the budget truly addresses the challenges faced by exporters, industrialists, and ordinary citizens. Budget 2026 Reaction Highlights Lack of Export Incentives Motiwala acknowledged that the Economic Survey indicated improved fiscal space and praised the country’s remittance performance, predicting that overseas Pakistanis could push annual remittances beyond 40 billion dollars. However, he expressed disappointment over the government’s failure to announce meaningful incentives for exports. According to him, the budget does not contain any clear strategy capable of substantially increasing exports, despite repeated official claims that export-led growth remains a national priority. He argued that exporters have once again been left searching for practical support measures. Fixed Tax Regime Still a Major Concern One of the strongest points raised during the Budget 2026 Reaction was the demand for a predictable fixed tax regime. Motiwala reiterated that businesses have consistently sought certainty in taxation. He maintained that authorities should collect taxes under a fixed framework rather than continuously changing policies that create uncertainty and discourage investment. He also criticized the government’s approach of placing additional burdens on existing taxpayers instead of expanding the tax base. According to him, Pakistan’s long-standing problem is not the absence of taxpayers but the failure to bring untaxed sectors into the formal economy. Energy Costs Remain the Elephant in the Room Energy prices emerged as another major concern. Although the government referred to energy-related initiatives, Motiwala argued that no practical details were shared. He questioned how the authorities intend to reduce costs associated with LNG and gas supplies. He also noted the complete absence of any significant discussion regarding electricity prices. For manufacturers already struggling with rising operational expenses, these unanswered questions could determine whether businesses survive or shut down. He warned that industries across the country are operating below capacity, reducing productivity and limiting employment opportunities. Refund Delays Continue to Hurt Industry The BMG chairman urged the government to immediately release pending refunds owed to exporters and businesses. He stated that billions of rupees remain tied up in delayed payments, depriving industries of working capital needed to maintain operations and pursue expansion. At a time when businesses are facing liquidity constraints, refund delays continue to undermine confidence in the economic system. Tax Relief Measures Win Limited Praise Despite his criticism, Motiwala acknowledged several positive decisions. He welcomed the elimination of tax on super tax collections, calling it a sensible move. He also appreciated the reduction in taxes imposed on salaried individuals and described lower taxes for the construction sector as encouraging developments that could stimulate economic activity. Construction, he argued, supports numerous allied industries and generates employment across various skill levels. Can the Government Achieve Its Ambitious Tax Target? Perhaps the most alarming question raised during the Budget 2026 Reaction concerned the government’s revenue ambitions. The federal government has set a tax collection target of 15 trillion rupees. Motiwala openly questioned how authorities plan to generate an additional 1.5 trillion rupees required to meet this objective. Without expanding the tax net and improving compliance mechanisms, he suggested that achieving such targets may prove difficult. The fear within the business community is that shortfalls could ultimately result in heavier taxation on already compliant sectors. Budget 2026 Reaction: Neither Good Nor Bad Summing up his assessment, Motiwala described the budget as neither entirely good nor entirely bad. He acknowledged selected relief measures but stressed that the absence of a comprehensive strategy for exports, energy affordability, industrial competitiveness, and tax expansion leaves many critical questions unanswered. His final message carried a warning policymakers may find difficult to ignore. If industries operate efficiently, people find jobs. When factories slow down, economic hardship spreads beyond boardrooms and factory floors to ordinary households. For Pakistan’s business community, the real test of this budget will not be in the announcements made today but in the results delivered over the coming months.

Budget 2026-27 Expected to Exceed Rs17.5 Trillion, New Taxes and Salary Relief Under Consideration
Pakistan

Budget 2026-27 Expected to Exceed Rs17.5 Trillion, New Taxes and Salary Relief Under Consideration

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The federal government is expected to unveil a budget exceeding Rs17.5 trillion for fiscal year 2026-27, with proposals aimed at increasing revenue, providing relief to salaried individuals and promoting economic growth. According to budget proposals, the government has set a tax revenue target of Rs15.267 trillion and plans to generate around Rs1 trillion in additional revenue measures. New taxes worth Rs220 billion have also been proposed. Relief Expected for Salaried Class The government is expected to approve an increase in salaries and pensions as part of the new budget. Authorities are considering providing up to Rs50 billion in tax relief to salaried individuals. A proposal is also under consideration to increase the number of income tax slabs from six to eight. People earning more than Rs183,000 per month are likely to receive relief under the revised tax structure. The government is also considering reducing the tax rate for one income bracket from 25 percent to 20 percent. Meanwhile, new tax rates of 29 percent and 32 percent have been proposed for monthly incomes ranging between Rs467,000 and Rs583,000. The maximum tax rate of 35 percent is expected to remain unchanged for individuals earning more than Rs583,000 per month. Officials are also considering abolishing the surcharge currently imposed on annual incomes exceeding Rs100 million. New Measures for Electric Vehicles The budget proposals include changes for the automobile sector. Sales tax on imported electric vehicles may increase to 25 percent, while the existing taxation regime for hybrid vehicles is likely to remain unchanged. The government is also considering imposing a carbon levy on conventional vehicles. At the same time, incentives have been proposed to promote local electric vehicle manufacturing. Customs duty and sales tax on motors and batteries may be reduced to 1 percent, while exemptions from other taxes, including the Federal Excise Duty and Capital Value Tax, are also under consideration. Petroleum Levy Target Set at Rs1.7 Trillion The government plans to collect Rs1.727 trillion through the petroleum levy during the next fiscal year. Budget proposals also include imposing a Federal Excise Duty on naphtha and some other petroleum products to increase revenues. Growth Targets and Employment Plans The government has set a GDP growth target of: 3.8 percent for agriculture4 percent for industry4.5 percent for large-scale manufacturing4.2 percent for the services sector Authorities are aiming to create two million jobs during FY2026-27. The target includes: However, the trade deficit is projected to remain above $37 billion. Exports are expected to reach $32.8 billion, while imports are estimated at $70 billion. Development Spending to Reach Rs3.669 Trillion The national development plan is expected to amount to Rs3.669 trillion. The federal Public Sector Development Programme (PSDP) is proposed at Rs1 trillion, while provincial development programmes are expected to total Rs2.218 trillion. Budget proposals indicate reductions in development spending for Punjab, Sindh and Khyber Pakhtunkhwa. The government has also decided to limit new projects, with priority likely to be given to defence and internal security requirements. Debt Servicing and Defence Spending Debt servicing is expected to remain the largest expenditure item in the upcoming budget. The government has allocated approximately Rs7.824 trillion for interest payments on loans. Meanwhile, the defence budget is expected to stand at around Rs3 trillion. Tax Reforms Under Consideration The government is considering bringing cryptocurrency trading into the tax net. Proposals also include imposing capital gains tax ranging from 10 percent to 30 percent. A reduction of 1 to 2 percent in the super tax is also under consideration. Officials are reviewing the possibility of ending tax exemptions available to the former tribal districts. In addition, sales tax on some food items, including ghee, cooking oil and milk, may increase. The government is also planning stricter penalties for businesses that fail to install point-of-sale (POS) systems. Solar Panel Tax Proposal Withdrawn Authorities have decided not to increase taxes on solar panels and stationery items. Officials have also opted against making major changes to taxation on the stock market. The Federal Budget 2026-27 is expected to be formally presented later today.

The Boardroom PK delivers trusted business news, analysis, and insights from Pakistan and beyond, keeping readers informed, inspired, and ahead in the evolving world of business and leadership.

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