What the 2025-26 Budget Holds
Great news for government employees and retirees! The government’s proposed for 2025-26 budget includes a 10% pay raise for active workers. For those who’ve retired, their pensions are also expected to see an increase. This boost is likely to be somewhere between 7.5% and 10%. It’s a welcome development for many.
There isn’t much hope for major tax relief for salaried individuals right now. The International Monetary Fund (IMF) has reportedly raised objections to keeping the current annual tax-free income threshold of Rs. 1.2 million. This position from the IMF suggests that the government might face pressure to revise this exemption. Consequently, salaried people may not see significant tax breaks as hoped.
Due to these developments, the government is looking at a new plan: they might add a minimum 1% income tax on yearly salaries at that level. This also means the amount of income that isn’t taxed at all could drop to Rs600,000. These changes are being considered in light of recent discussions and financial outlooks. Such adjustments would significantly impact a large segment of the salaried population These changes are relevant to the 2025-26 budget.
It’s been suggested that everyone might get a 2.5% income tax cut, no matter how much they earn. However, this isn’t a final decision, and it remains a proposal for now. The government is still weighing its options regarding this potential relief. Therefore, the implementation of this tax reduction is yet to be confirmed.
The 2025-26 Budget: Nearing Approval
To expand who pays taxes and to achieve the financial aims of the IMF program, the government could stabilize the corporate income tax rate at 2.5%. This adjustment seeks to broaden the base of taxpayers among businesses. Such a move is anticipated to contribute significantly to the national revenue. This is a key aspect of the 2025-26 budget. It reflects a strategic effort to enhance fiscal stability.
Today at 4 PM, PM Shehbaz Sharif is set to lead a federal cabinet meeting. They’ll be giving the final go-ahead to the 2025-26 budget proposals before these are formally introduced in the National Assembly. This crucial meeting will finalize the government’s financial plans. The outcome will pave the way for the budget’s official presentation to the legislature.
Finance Minister Muhammad Aurangzeb will present the federal budget for the upcoming fiscal year in the National Assembly. Following this, he will also provide a copy of the Finance Bill, 2025, which includes the Annual Budget Statement, to the Senate. This standard procedure ensures both houses of parliament receive the comprehensive financial plan. It marks a significant step in the annual budget approval process for the 2025-26 budget.
