The federal government unveiled a Rs18.771 trillion Budget 2026-27, introducing relief measures for the property and information technology sectors while proposing salary and pension increases to cushion the impact of inflation.
Presenting the budget in the National Assembly on Friday, Finance Minister Senator Muhammad Aurangzeb said the government was formulating its fiscal strategy amid a challenging economic environment marked by an energy crisis and rising geopolitical tensions in the Middle East.
Property Sector Gets Tax Relief
In a move aimed at stimulating investment and boosting activity in the real estate market, the government proposed significant reductions in taxes applicable to property transactions.
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According to the Finance Minister, the withholding tax on the purchase of property by tax filers is proposed to be reduced from 2.5pc to 1.5pc.
Similarly, the withholding tax on property sales is proposed to be cut from 5.5pc to 2.75pc.
The government believes that lowering transaction costs could encourage documented investment in the property sector and improve overall market activity.
IT Sector Incentives Extended Until 2029
Highlighting the performance of Pakistan’s technology industry, Aurangzeb described the digital economy as one of the country’s fastest-growing sectors.
He noted that IT and IT-enabled services exports have reached $3.8 billion, with exports expected to approach $4.5 billion by the end of the current fiscal year.
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To support continued growth, the government proposed extending the concessional Final Tax Regime (FTR) rate of 0.25% for IT companies.
The reduced tax rate, originally scheduled to expire on June 30, 2026, is now proposed to continue for an additional three years until June 30, 2029.
Officials say the extension is intended to enhance investor confidence and maintain the competitiveness of Pakistan’s growing technology sector.
Salaries, Pensions and Minimum Wage to Increase
The budget also includes measures aimed at providing relief to employees affected by rising living costs.
The federal government proposed a 7% increase in salaries for public sector employees.
Retired government employees are set to receive a 7% increase in pensions, while the minimum monthly wage has been proposed to increase by 10%.
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The government said these measures reflect its efforts to balance fiscal discipline with social protection.
Economic Challenges Remain
The budget was presented at a time when Pakistan continues to face economic pressures, including inflationary concerns, energy sector challenges, and uncertainty linked to developments in the Middle East.
Officials maintain that the proposed measures are designed to support investment, encourage exports, and provide targeted relief to various segments of society.
