Federal budget for FY2026-27 to be presented in NA today

ISLAMABAD: The federal budget for fiscal year 2026-27 is scheduled to be presented in both houses of parliament on Thursday, with Finance Minister Muhammad Aurangzeb expected to lay out the government’s financial plan in the National Assembly at 3pm and later in the Senate, according to Parliamentary Affairs Minister Tariq Fazal Chaudhry.

The coalition government is preparing to announce new tax measures estimated at between Rs660 billion and Rs700bn. The budget is also expected to include selective tax relief for salaried individuals, particularly those earning between Rs230,000 and Rs341,000 a month.

Official sources involved in budget preparations said people in the Rs230,000 to Rs300,000 monthly income bracket were likely to get a substantial reduction in their tax burden. However, a large section of salaried individuals earning between Rs100,000 and Rs183,000 per month may not receive any relief in the upcoming budget.

Tax net and remittance proposals

Prime Minister Shehbaz Sharif has said the government is taking steps to bring the informal economy into the tax net. Last week, the government introduced the Fixed Tax Asaan Scheme, aimed at bringing small traders and shopkeepers with annual turnover of up to Rs200 million into the tax system.

The government was also considering easing the remittance cap in the new budget, as overseas Pakistanis in a number of countries have been facing difficulties in safeguarding their investments and liquid assets abroad.

Centre-province agreement on fiscal space

Until last week, the federal government, its coalition partners and the provincial governments had been struggling to build consensus over the Centre’s demand for more than Rs1 trillion for strategic needs. On Monday, however, the ruling PML-N and its main ally, the PPP, reached a broad understanding on reducing development and other expenditures across all tiers of the federation.

Under that arrangement, the two parties agreed to address an estimated Rs800bn revenue shortfall this year and create similar, but larger, fiscal space next year for additional strategic requirements. The agreement also provides that provincial shares from the federal divisible pool will remain frozen at the current fiscal year’s level.

Development spending trimmed

The National Economic Council, the federation’s highest economic decision-making forum, has fixed the combined federal and provincial development budget for FY2026-27 at Rs3.218 trillion. This is Rs1.046tr lower than the development plans earlier approved by the Annual Plan Coordination Committee.

Among the provinces, Punjab saw the sharpest reduction in its development plan, which was cut by nearly half, or 49pc. In contrast, Balochistan’s development plan of Rs308bn was left unchanged.