Budget FY2025-26: Rs 2.557 trillion allocated for defence budget

ISLAMABAD: According to the budget documents, the Defence Budget allocation has been increased from Rs 2,189 billion (revised for FY2025) to Rs 2,557 billion for the upcoming fiscal year FY2025-2026.

Budget volume likely to squeeze, defence budget likely to expand

Out of this allocation, Rs 7.95 billion will be spent on administrative expenses, while Rs 2,550 billion are earmarked for defence services, divided between employees related expenses, operating expenses, physical assets and civil works.

The decision to increase defence budget comes in wake of recent Pakistan India escalation. The hike in defence spending is seen as a necessary step to strengthen national security.

SALARIED CLASS GIVEN TAX RELIEF

Meanwhile, salaried class has also been given relief, with the budget recommending significant reductions in income tax rates across all income slabs for salaried employees. A 30 per cent disparity allowance for employees of Grade-1 to Grade-16 has also been announced.

On the tax reduction, the budget has proposed the income tax revision rate from 5 per cnet to 1 per cent for salaried employees earning between Rs 600,000 and Rs 1.2 million annually. It has also proposed reduction in tax amount from Rs 30,000 to Rs 6,000 for employees earning Rs 1.2 million annually.

Budget FY2025-26: relief for salaried class, tax rates slashed

Moreover, the budget has proposed a 10 per cent increase in government employees’ salaries and a 7 per cent increase in pensions.