KP to present Rs2.15tr tax-free budget today

PESHAWAR: The Khyber Pakhtunkhwa government is set to present a tax-free budget exceeding Rs2.15 trillion for the 2026-27 fiscal year before the provincial assembly on Friday, with no fresh taxes proposed and a seven per cent increase in salaries for government employees, according to details shared by an official.

The official said the budget includes more than Rs235 billion for the Annual Development Programme (ADP), while the province’s own-source revenue target has been set at Rs182 billion. He also said the government has decided to increase conveyance allowance alongside the pay raise for public sector employees.

According to the same official, the budget will not impose new taxes. He said the infrastructure development cess would be cut to 0.75pc from the current 2pc, while tax on five-marla houses would also be lowered, a move he said would benefit more than 200,000 households. The budget, he added, will also provide loans for students and for Pakistanis going abroad, and has been framed as a pro-growth document.

The official further said the province had based its budget estimates on a Federal Board of Revenue tax target of Rs15.2 trillion. He added that approval of the federal grant would depend on the assent of jailed Pakistan Tehreek-i-Insaf founder Imran Khan.

Earlier budget framework

In its budget strategy paper released in May, the finance department had estimated the provincial budget outlay for the next fiscal year at Rs2.3 trillion. That document put federal tax assignment at Rs1.6 trillion, own-source revenue at Rs150 billion, merged areas funds at Rs321 billion and foreign project assistance at Rs160 billion.

The strategy paper had projected the current budget for settled areas at Rs1.5 trillion and their ADP at Rs426 billion. It had also estimated current expenditure for merged areas at Rs181 billion, with their ADP set at Rs153 billion.

Development spending shortfall

The budget strategy paper noted that development expenditure in the current fiscal year had struggled to meet targets. It said actual spending stood at Rs169 billion against a budget estimate of Rs547 billion, reflecting a 30pc achievement rate.

This has resulted in a downward revision of the total expected development outlay to Rs444bn, though this still represents a 31pc increase over the previous year’s actual spending. Overall, the grand total of expenditures as of March stands at Rs988bn, 50pc of the budget, leading to a rationalised annual growth projection of 19pc as the government balances fiscal restraint with protected obligations

A notification issued by the assembly secretariat said that, under sub-rule (1) of Rule 33 of the Khyber Pakhtunkhwa Government Rules of Business, 1985, the annual budget for the 2026-27 financial year will be presented in the Khyber Pakhtunkhwa Assembly on June 19 at 2pm.