The National Assembly on Thursday approved the federal budget for fiscal year 2025-26, with certain amendments proposed by ruling coalition members accepted to the Finance Bill, despite strong protests from the opposition.
The budget has a total outlay of Rs. 17.57 trillion and was presented to Parliament by Finance Minister Muhammad Aurangzeb two weeks ago. Since its tabling, the budget has been examined by the standing committees on finance of both Houses of Parliament. On Thursday, it was approved by a majority vote following a clause-by-clause reading and adoption of amendments through the voting process.
Budgetary measures
During the proceedings, Aurangzeb presented amendments to the Sales Tax Act 1990, including a provision granting the finance committee authority to order the arrest of traders involved in tax fraud exceeding Rs 50 million. Previously, the amendments had proposed giving arrest powers directly to tax commissioners. Amendments to the Sales Tax Act introduced by opposition members were rejected by majority vote.
The Finance Bill 2025 also introduces a revised income tax structure for salaried individuals, with those earning up to Rs. 600,000 annually remaining exempt from income tax while those earning from Rs. 600,000 to Rs. 1.2 million to pay 1% tax. Individuals earning between Rs. 1.2 million and Rs. 2.2 million annually will pay a fixed tax of Rs. 6,000, while those earning between Rs. 2.2 million and Rs. 3.2 million will be taxed at Rs. 116,000. For annual incomes between Rs. 3.2 million and Rs. 4.1 million, the tax rate has been set at Rs. 346,000.
The budget has set an economic growth target of 4.2% and inflation rate of 7.5%. It estimates net revenue receipts at Rs. 11.07 trillion, projecting FBR collections to rise by 18.7% to Rs. 14.13 trillion. Non-tax revenues are estimated at Rs. 5.15 trillion.
The Finance Bill has allocated Rs. 2.55 trillion for defense, Rs. 1.06 trillion for pension expenditures, and Rs. 1.19 trillion for subsidies on electricity and other sectors. It has increased salaries of government employees by 10% and granted a 7% rise in pensions.
The budget also includes Rs. 716 billion for the Benazir Income Support Program and Rs. 1 trillion for the Public Sector Development Program (PSDP), including Rs. 328 billion for transport infrastructure projects. The budget allocated Rs. 39.5 billion for the Higher Education Commission and Rs. 18.5 billion in the PSDP for various education initiatives.
The agriculture sector would receive Rs. 4 billion for 10 ongoing and five new schemes.
Coalition approval
Prime Minister Shehbaz Sharif lauded the entire economic team, particularly the finance minister, for their hard work and dedication in preparing the federal budget. He thanked the federal cabinet and allied political parties for their support in finalizing the budget. Prior to the final vote, the federal cabinet approved the amended Finance Bill 2025.
Addressing the National Assembly prior to the vote, Pakistan Peoples Party (PPP) Chairman Bilawal Bhutto-Zardari welcomed the federal government’s inclusion of his party’s key proposals in the budget. He noted the BISP’s allocations had increased by 20%, declaring it a clear reflection of the government’s commitment to social protection.
The PPP leader also noted the government’s revised tax rates for salaried individuals and credited his party’s active role in securing a 50% reduction in proposed taxes on solar panels. He similarly claimed credit for amendments restricting the Federal Board of Revenue (FBR)’s powers of arrest. “These are the reasons why the PPP is supporting this budget,” he said.
Opposition rejects
PTI Chairman Gohar Ali Khan criticized the budget as “disastrous,” arguing it would severely harm the country. He claimed the budget did little to improve the prospects of the agricultural sector and large-scale industry, warning this could push the country to bankruptcy.
“Contrary to its claims, the government has failed to bring about economic reforms or complete the privatization of any major entity,” he said. “That is why I will not say it is a visionary budget in the absence of any reforms,” he said, while also criticizing the boost in allocation for the BISP.
He claimed the new powers granted to the FBR to appoint auditors for evaluation and audit were unconstitutional and in violation of Article 242 of the Constitution and relevant rules.