President Asif Ali Zardari on Friday gave his assent to the Finance Bill, 2026, formally approving Pakistan’s federal budget for the fiscal year 2026-27 after it cleared the National Assembly earlier this week.
The presidential approval marks the final constitutional step before the budget comes into force on July 1, setting the government’s fiscal roadmap with total expenditures of Rs18.77 trillion, an ambitious revenue target, revised tax measures, and relief for salaried employees.
In a post on the Presidency’s X account, the President’s Office said: “President Asif Ali Zardari has assented to the Finance Bill, 2026, relating to the federal budget for fiscal year 2026-27.”
The National Assembly approved the Finance Bill on Tuesday after extensive debate. Lawmakers adopted amendments moved by Finance Minister Muhammad Aurangzeb in Clauses 5, 6 and 6A while rejecting the Senate’s recommendations related to Clause 6. The House also voted down more than 60 amendments proposed by opposition members from Pakistan Tehreek-e-Insaf (PTI) and Jamiat Ulema-e-Islam Fazl (JUIF) covering Clauses 2, 3, 4, 5, 6 and 8.
Growth Targets and Major Spending Plans
The budget outlines the government’s economic priorities for the next fiscal year, projecting economic growth of 4.0 percent while targeting inflation at 8.2 percent. Authorities expect to keep the fiscal deficit at 3.6 percent of gross domestic product and generate a primary surplus of 2.0 percent of GDP as Pakistan continues efforts to strengthen public finances.
The Federal Board of Revenue has received a tax collection target of Rs15.264 trillion. Net federal revenues are estimated at Rs11.752 trillion.
Debt servicing remains the government’s biggest expense. Around Rs8.05 trillion has been allocated for markup payments and debt repayment obligations.
The federal government has earmarked Rs1 trillion for the Federal Public Sector Development Programme, while the overall national development programme stands at approximately Rs3.675 trillion.
Defence spending will receive Rs3 trillion under the approved budget. The government has also allocated significant funding for pensions, civil administration, subsidies and social protection programmes.
The Benazir Income Support Programme will receive Rs838 billion, reflecting a major increase over last year’s allocation to expand support for low-income families and vulnerable households across the country.
The budget also provides a 7 percent increase in salaries for government employees and a similar increase in pensions. It includes additional relief measures for public sector employees and armed forces personnel while reducing the tax burden on salaried individuals across four income slabs.
Tax Changes, Imported Vehicles and Electric Cars
The Finance Bill introduces several changes affecting imports, vehicles and consumer taxation from the new fiscal year.
Beginning July 1, imported vehicles with engine capacities between 2,000cc and 3,000cc will face an 86 percent duty. Vehicles above 3,001cc will attract a 92 percent duty.
Imported electric vehicles valued at up to $75,000 will remain exempt from Customs duty. Electric vehicles priced between $75,000 and $110,000 will face a 30 percent Customs duty, while those exceeding $110,000 will be subject to a 40 percent duty.
The government has also imposed a concessional 10 percent sales tax on children’s pencils, pens and sharpeners.
Owners of vehicles up to 1,000cc registered in the federal jurisdiction will pay a one-time fixed tax of Rs10,000. Pre-2010 models in the same engine category will be charged a token tax of Rs20,000.
The budget reflects the government’s broader strategy of increasing revenue, improving fiscal discipline and maintaining support for development spending while continuing reforms linked to economic stability. The approval also comes as Pakistan seeks to sustain macroeconomic gains achieved over the past year through fiscal consolidation, stronger revenue collection and structural reforms aimed at supporting long-term economic growth.
With the President’s assent, the Finance Bill, 2026, will take effect from July 1, paving the way for implementation of the federal government’s financial agenda for the new fiscal year.
