Pakistan Federal Budget 2026-27: Complete Guide — Salary Hike, BISP, Tax Relief

Pakistan Federal Budget 2026-27: Complete Guide — Salary Hike, BISP, Tax Relief & More

Finance Minister Muhammad Aurangzeb presented Pakistan's Federal Budget for fiscal year 2026-27 in the National Assembly on June 12, 2026. With a total outlay of Rs 18.771 Trillion, this is one of the largest budgets in Pakistan's history. It focuses on relief for salaried workers, increased BISP allocations, tax reforms, and massive development spending.

Important: This budget has been prepared under the IMF Extended Fund Facility (EFF) program. The government's key targets are 4% GDP growth and 8.2% inflation for FY2026-27.

Budget 2026-27 Key Numbers at a Glance

Category	Amount
Total Budget Outlay	Rs 18.771 Trillion
FBR Tax Collection Target	Rs 15.264 Trillion
PSDP Development Budget	Rs 3.675 Trillion
Debt Servicing (Interest Payments)	Rs 7.824 Trillion
BISP Allocation	Rs 838 Billion (17% increase)
GDP Growth Target	4%
Inflation Target	8.2%
Remittances (11 Months)	$38 Billion

✅ Salary Increase for Govt Employees — BPS-1 to BPS-22

The government has announced a 7% Ad Hoc Relief Allowance on basic pay for all federal government employees from BPS-1 to BPS-22, effective July 1, 2026. Pensioners will also receive a matching 7% increase in their monthly pension.

• ✔️ Applies to all grades BPS-1 through BPS-22
• ✔️ Pensioners also get 7% increase
• ✔️ Private sector minimum wage raised by 10%
• ✔️ Effective from July 1, 2026

💰 Income Tax Relief for Salaried Class

Budget 2026-27 brings major tax relief for salaried individuals. The government has expanded income tax slabs from 6 to 8 categories and completely abolished the 9% surcharge previously imposed on salaried taxpayers.

Annual Income	Relief
Up to Rs 1.2 Million/year	Zero Tax (unchanged)
Rs 1.2 Million to Rs 2.2 Million	Reduced Tax Rate
Up to Rs 3.6 Million	New relief proposals included
Rs 10 Million and above	10% surcharge abolished

Withholding tax on international debit and credit card transactions has been slashed from 5% to just 0.5%, providing major relief to travelers and online shoppers.

🤲 BISP 8171 — Big Relief for Low-Income Families

The government has allocated Rs 838 Billion for the Benazir Income Support Programme (BISP) — a 17% increase from last year. Approximately 12 million families across Pakistan will benefit from this programme.

• 💚 Total BISP Budget: Rs 838 Billion (17% more than last year)
• 💚 Beneficiary Families: Approx. 12 Million
• 💚 Quarterly Stipend: Increased from Rs 13,000 to Rs 14,500
• 💚 New PM Apna Ghar (Housing) Programme: Rs 71 Billion

How to Check BISP 8171 Status: Send your CNIC number via SMS to 8171 or visit the official BISP website to check your eligibility and payment status.

🏗️ Development Projects — PSDP 2026-27

The National Economic Council (NEC) approved a Rs 3.675 Trillion national development outlay. Major projects included in the budget:

• 🛣️ Transport Infrastructure: Rs 365 Billion
• 🛣️ N-25 Highway (Karachi to Chaman): Rs 100 Billion
• 🛣️ Sukkur-Hyderabad Motorway: Rs 30 Billion
• 🚂 ML-1 Railway (Karachi-Rohri): Rs 25 Billion
• 💧 Diamer-Bhasha Dam: Rs 14 Billion
• 💧 Dasu Hydropower Project: Rs 22 Billion
• 💧 Mohmand Dam: Rs 15 Billion
• 💧 Karachi K-IV Bulk Water Supply: Rs 10 Billion
• 🏥 Health Sector (ADP): Rs 25.1 Billion
• 🎓 Higher Education: Rs 46 Billion (up from Rs 34.9 Billion)
• 🏘️ Urban Development & Housing: Rs 54.6 Billion

🏭 Super Tax Reduction — Relief for Businesses

The Finance Minister proposed eliminating Super Tax on six income slabs ranging from Rs 150 Million to Rs 5 Billion. For companies earning more than Rs 5 Billion annually, the Super Tax rate has been reduced from 10% to 8%. However, banks, oil & gas exploration companies, and fertilizer manufacturers are excluded from this relief.

💻 IT Sector & Freelancers — Great News!

• ✔️ Final Tax Regime for IT companies and freelance exporters extended until 2030
• ✔️ Over 1.6 Million traders have joined digital payment systems
• ✔️ 133 Million people now on digital banking platforms
• ✔️ More than 200 international companies have invested in Pakistan's Technology Parks
• ✔️ Tax collection reached Rs 13,000 Billion — up from Rs 7,200 Billion in 2022-23

⛽ Impact on Vehicles & Petroleum

• ⚠️ 10% Environmental Levy on petrol/diesel vehicles with engine 2001cc–3000cc
• ⚠️ 19.5% Environmental Levy on vehicles above 3000cc
• ⚠️ Electric, hybrid, and plug-in hybrid vehicles may become more expensive
• ✔️ Import duty on raw materials reduced to 1%
• ✔️ Import duty on local manufacturing parts reduced from 10% to 5%
• ✔️ Import tax on auto parts for local industry reduced from 20% to 10%

📦 Items Getting Cheaper

• ✔️ Cosmetics (face powder, mascara) — tax reduction
• ✔️ Shampoo and soap — duty relief
• ✔️ Sanitary pads — tax completely withdrawn
• ✔️ Contraceptives — tax completely withdrawn

🏘️ Regional Allocations

Region	Allocation
Azad Jammu & Kashmir (AJK)	Rs 146 Billion
Gilgit-Baltistan	Rs 88 Billion
Merged Districts (KPK)	Rs 95 Billion
PM Youth Skills Development	Rs 5.29 Billion
NAVTTC Skill Development	Rs 2.61 Billion

📊 Pakistan's Economic Performance in FY2025-26

Before the new budget, Pakistan's economy showed strong signs of recovery in the outgoing fiscal year:

• 📈 GDP Growth: 3.7% (up from 3.18% last year)
• 💰 GDP Size: Record $452.1 Billion
• 📉 Average Inflation: 6.7% (significantly lower than previous years)
• 💸 Remittances: $38 Billion in 11 months — a record high
• 🏦 Tax Collection: Expected to reach Rs 13,000 Billion by year end

❓ Frequently Asked Questions (FAQs)

Q: When will Budget 2026-27 be implemented?
A: The budget takes effect from July 1, 2026.

Q: How much will BISP quarterly payment increase?
A: The quarterly stipend is proposed to increase from Rs 13,000 to Rs 14,500 per family.

Q: How much salary increase will government employees get?
A: All BPS-1 to BPS-22 employees will receive a 7% Ad Hoc Relief Allowance on basic pay. Pensioners also get 7%.

Q: Who benefits from income tax relief?
A: Salaried individuals earning between Rs 1.2 Million and Rs 3.6 Million annually will see reduced tax rates. The 9% surcharge on salaried taxpayers has been completely abolished.

Q: What items will become cheaper?
A: Cosmetics, soap, shampoo, sanitary pads, and contraceptives will become cheaper due to tax reductions or complete removal of duties.

Q: What items will become more expensive?
A: Luxury vehicles (above 2000cc), electric vehicles, and hybrid vehicles may see price increases due to new environmental levies.

Q: How many families will benefit from BISP in 2026-27?
A: Approximately 12 million families across Pakistan will benefit from BISP under this budget.