🏛 Federal Budget 2025–26: Key Highlights & Tax Reforms in Pakistan

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đź“… Budget Overview

Pakistan’s Federal Budget 2025–2026 was presented in the National Assembly on June 10, 2025. With a total outlay of Rs. 17.6 trillion, this blueprint is designed to promote economic growth, implement broad-based tax reforms, and drive digital transformation. Aligned with IMF guidelines, it provides relief for everyday Pakistanis while enforcing fiscal discipline.

📝 Need legal help understanding how this budget affects your taxes or business?
📞 Contact Qadri Law Chambers | đź“§ qadri.law.chambers@hotmail.com


📊 Ambitious Economic Targets

The government has laid out aggressive economic goals for FY26:

  • GDP Growth Target: 4.2% (up from 2.7% in FY25)
  • Tax-to-GDP Ratio: Increase from 10% to 14%
  • Revenue Goal: Rs. 14.13 trillion via FBR
  • Non-Tax Revenue: Rs. 5.15 trillion

Keyword Targets: Federal Budget 2025–26 Pakistan, GDP growth Pakistan, FBR revenue target, Tax-to-GDP ratio


đź’Ľ Tax Reforms to Widen the Net

Aimed at building a fair and transparent tax system:

  • New Taxes Introduced: Rs. 623+ billion on digital transactions, agriculture, freelancing
  • Non-Filer Restrictions: Can’t buy vehicles, properties, or open normal bank accounts
  • E-Commerce Withholding Tax: 0.25%–2% on online sales collected by banks and couriers
  • Property Taxes: Filers: 1.5–2.5%; Non-filers: up to 18.5% purchase & 11.5% sale
  • Capital Gains & Dividends: Increased to up to 25% for debt-based mutual funds and stocks

👨‍💼 Relief for Salaried Class

The budget provides much-needed income tax relief in Pakistan:

  • Incomes up to Rs. 600,000: Zero tax
  • Rs. 600,001 – 1.2M: 1% (reduced from 5%)
  • Rs. 1.2M – 2.2M: 11%
  • Rs. 2.2M – 3.2M: 23%
  • Surcharge Relief: For incomes above Rs. 10M, reduced from 10% to 9%

Other benefits:

  • 10% salary hike for government employees
  • 7% pension increase
  • 25% tax rebate for teachers and researchers (restored till June 30, 2025)
  • Tax credit on home loans up to 2,500 sq. ft.

đź’¸ Sectoral Spending & Fiscal Discipline

The budget aligns infrastructure growth with financial responsibility:

  • Defense Allocation: Rs. 2.55 trillion (20% increase)
  • Development Budget: Rs. 1 trillion for Public Sector Development Program
  • Debt Servicing: Rs. 8.2 trillion (47% of expenditure)
  • Austerity: Rs. 1,300 billion saved through lower State Bank rates

đź’» Embracing Technology & Digital Governance

The Finance Act 2025–26 focuses on modernizing tax systems and boosting compliance:

  • AI-Powered Tax Systems: Improve transparency and tracking
  • Recognition of Digital Payments: For loans, gifts, and investments
  • Real-Time Cargo Tracking
  • Tax Exemptions for SEZs and STZs valid till 2035 or for 10 years

đź›’ Sales Tax & E-Commerce Measures

Sales tax enforcement has been enhanced, especially in the digital commerce sector:

  • Online Orders: Tax collected by gateways & courier services
  • Solar Panels: Exemption withdrawn
  • Tribal Areas: Gradual increase to 16% by 2028–29
  • Imported Goods: Retail price set at 130% of customs value
  • Locally Made Cars (under 850cc): Tax increased from 12.5% to 18%

đź“‘ Additional Compliance Measures

  • Pensions over Rs. 10M (Under 70): Taxed at 5%
  • Withholding Tax: 15% on services, 20% on profits from debt
  • Cash Transactions: Over Rs. 200,000 disallowed for deductions
  • NTN Enforcement: 10% of purchases from non-NTN holders disallowed
  • Simplified Appeals: Direct filing to Appellate Tribunal bypassing Commissioner

⚖️ Legal Help for Budget 2025–26

At Qadri Law Chambers, we help individuals and businesses navigate:

  • Tax law & filing under new slabs
  • Property & real estate tax advisory
  • Freelancing & digital transaction taxation
  • Salary, pension, and compliance legal consultation

👉 Learn more about us or get in touch


📉 Challenges and Future Outlook

While Federal Budget 2025–26 gives a breather to the salaried class and expands digital taxation, new taxes on fuel and online services may pressure households. Inflation, rising debt, and global uncertainty remain major hurdles.

Still, this Rs. 17.6 trillion financial plan could mark a turning point for a more resilient, tech-driven, and accountable Pakistan.

External Resources for Further Reading

For additional insights and official documents related to the Federal Budget 2025–26, you can explore the following trusted sources:


📝 Need legal help interpreting how this budget affects your finances or business?
📞 Contact Qadri Law Chambers for expert legal advice.

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