Budget 2025-26 today: what can you expect?

ISLAMABAD: The federal government is set to present a Rs17.6 trillion budget for the fiscal year 2025-26 on Tuesday, with total revenue projected at Rs19.4 trillion and the tax collection target fixed at Rs14.13 trillion.

A major chunk, Rs6.2 trillion, is allocated for debt repayments, which also reflects the anticipated budget deficit. But what could the common man expect from the budget 2025-26.

SALARY AND PENSION RELIEF

Government employees are expected to get some relief. A 10 per cent increase in salaries and a 5 per cent to 7.5 per cent hike in pensions are on the cards.

For employees in Grade 1 to 16, a 30 per cent  disparity allowance has been proposed. For officers in Grade 17 to 22, a 15 per cent salary hike is being considered.

The merger of the 2022 ad-hoc allowance into the basic pay is also under discussion.

On the taxation side, the government is planning to raise the annual tax-free income threshold from Rs600,000 to Rs1 million. If passed, this would exempt monthly salaries up to Rs83,000 from income tax — a significant jump from the current Rs50,000 limit.

Sources say the IMF is open to revising the income tax slabs.

CARS: MIXED BAG FOR BUYERS

Car prices may see both ups and downs. Luxury vehicles are likely to become costlier due to higher advance taxes.

But used and small cars might get cheaper if the proposed easing of import duties is approved.

Prices for small cars could fall below Rs2 million, offering some relief to middle- and lower-income families.

COSMETIC PRODUCTS: DUTY CUTS EXPECTED

The federal budget is also expected to reduce import duties on over 7,000 items — including many cosmetic products.

This includes imported lipstick, mascara, perfumes, makeup kits, body sprays, creams, and lotions.

Fashion and lifestyle accessories such as imported shoes, handbags, sunglasses, and shaving products may also see duty reductions between  two per cent to five per cent.

GROCERY & EDIBLE ITEMS: TAXES LIKELY TO RISE

On the flip side, several packaged grocery and food items may become more expensive.
The government is planning to impose Federal Excise Duty (FED) on soft drinks, instant noodles, ice cream, frozen meat, chips, biscuits, sauces, and ready-to-eat meals.

Officials say this move is aimed at widening the tax base and boosting revenue collection.

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