PAKISTAN BUDGET 2025-26: 7–10% SALARY AND PENSION HIKE EXPECTED

Coalition partners push for 15%, final decision on June 10
Islamabad, June 7, 2026 — Pakistan’s National Economic Council (NEC) will convene tomorrow, June 8, under the chairmanship of the Prime Minister. Chief ministers of all four provinces and Gilgit-Baltistan, federal ministers, and the Prime Minister of Azad Kashmir are expected to attend. The Economic Survey is likely to be presented on June 9.
According to sources in the Ministry of Finance, the federal budget for the next fiscal year is set to total Rs 17.1 trillion. The government has set an economic growth target of 4.1% with average inflation projected at 8.4%.
Key Budget Figures:
The tax revenue target stands at Rs 15,267 billion, non-tax revenue at Rs 2,768 billion, and the federal Public Sector Development Programme (PSDP) at Rs 1.1 trillion. Debt servicing is proposed at Rs 7,824 billion and defence allocation at Rs 2,665 billion. Petroleum levy collection has been targeted at Rs 1,727 billion.
Salaries and Pensions:
Government employees can expect a salary and pension raise of between 7% and 10%, though coalition partners are pushing for a 15% increase. A final decision will be taken at the federal cabinet meeting on June 10.
New Tax Measures:
The upcoming budget proposes a capital gains tax of 10–30% on cryptocurrency trading profits. Tax exemptions for former tribal areas are likely to be withdrawn, while new taxes worth Rs 220 billion are also on the table. The IMF has urged the government to raise the general sales tax (GST) from 18% to 19%.
Fixed Tax Scheme for Traders:
Shopkeepers with annual sales of up to Rs 200 million will be eligible for a fixed tax scheme, paying a 1% tax rate with an exemption from audit. A fixed tax of Rs 25,000 will be required alongside their tax return.
Food Items and Other Decisions:
Printed retail prices will be made mandatory on dozens of essential food items — including formula milk, ketchup, ghee, cooking oil, tea, sugar, and powdered milk — to facilitate sales tax collection under the Third Schedule. Tax exemptions on CKD kits for electric vehicles and concessions on hybrid vehicles are set to be withdrawn, while a 1% sales tax on locally assembled electric vehicles will remain in place through June 30. A reduction of 1–2% in the super tax is also under consideration.