Federal budget 2025-26 with Rs17,500 billion outlay will be unveiled today

The federal budget for the next financial year (FY), 2025-2026, will be presented in the National Assembly (NA) at 5:00 PM today, reported the 24NewsHD TV channel. 

Prior to the presentation of the budget, the federal cabinet, at its meeting, will first approve the budget proposals to be included in the document. 

There is a proposal that the outlay of the money bill should be over Rs17,500 billion, while the budget deficit is likely to be estimated at Rs6,500 billion. 

The federal government’s total income for the next FY has been estimated at Rs19,000 billion, while the income to be generated from tax collection has been estimated at Rs15, 500 billion.

The tax collection target suggested for the Federal Board of Revenue (FBR) is Rs14, 300 billion, while there is a proposal to collect Rs4,900 billion under the head of sales tax in the next FY, while Rs1,740 billion under the head of customs duty.

A proposal has been made to collect Rs1,311 billion under the head of petroleum levy.  

There is a plan to collect tax on agricultural income.  

Registration of taxpayers for the collection of the agriculture tax has also been suggested. 

The imposition of five per cent federal excise duty on fertilizers and sprays has also been proposed, while a suggestion has been made to levy three to five per cent sales tax, which is presently nil, on petroleum products in the next FY.     

Rs5 per liter carbon levy has also been suggested. 

Similarly, there is a proposal to impose additional taxes on canal water in Sindh and Punjab. 

There is a suggestion to provide a subsidy to the electric vehicle charging stations.

Setting the manufacturing target for the next FY at 4.7 per cent has been suggested, while 3.5 per cent target has been recommended for gas, electricity and water supply. 

The documents inform that the wholesale and retail trade target would be set at 3.9 per cent, while that of transport, storage and communications at 3.4 per cent.

There is a recommendation that the target for information and communication for the next financial year should be set at five per cent, while that of financial and insurance activities at five per cent.       

The prices of several items are likely going up in today’s budget. 

There is a proposal to increase sales tax levied on locally manufactured vehicles from the present 12.5 per cent to 18 per cent.     

There are also suggestions to tax bakery products, fertilizers and pesticides. 

However, a proposal has been made to abolish the excise duty levied on the property sector, while a cut in taxes on drinks and cigarettes has been suggested.  

The economic growth rate target for the next FY has been set at 4.2 per cent, while that for the agriculture sector at 4.5 per cent; for the industrial sector a 4.3 per cent, and for the services sector at four per cent.  

As per documents available with the 24News TV channel, there is a suggestion to set the investment target for the next financial year at 14.7 per cent; fixed investment target at 13 per cent; the construction sector target at 3.8 per cent, while that of the National Savings at 14.3 per cent.  

The development budget for the next FY would be Rs4083 billion, while a recommendation has been made that the federal development budget should be Rs1,000 billion.

There is a proposal to allocate Rs662 billion for the development of various ministries and divisions; Rs229 billion would be earmarked for the development of the National Highway Authority (NHA), while the development budget of the Power Division would be Rs104 billion. 

Setting aside Rs2,795 billion for the development of provinces has also been recommended. 

Five to seven per cent increase in the salaries and pensions of government servants has also been proposed in the budget. 

The allocation of Rs147.78 billion for water projects in the next FY has been recommended.

Similarly, there is a suggestion to earmark Rs20 and Rs5 billion for the upgradation of the Dasu hydropower project (Phase-I) and Mangla Dam power station, respectively.  

An allocation of Rs35 billion for Diamer Bhasha Dam has also been proposed. 

Likewise, the proposal to set aside Rs9.47 billion for water supply to Karachi is also under consideration.

The federal government has proposed imposing an 18% sales tax on e-commerce transactions in the Budget 2025–26.

The budget also includes recommendations to slap excise duties on a wide range of processed and frozen foods. Items like chips, cold drinks, noodles, ice cream, biscuits, frozen meat, sauces, and ready-made meals could face an additional 5% excise duty.

These measures are part of broader tax reforms aimed at increasing revenue collection amid ongoing negotiations with the IMF. Several processed food items not previously taxed may now fall under the excise duty net.

According to official budget documents for FY2025–26, the government has proposed an annual inflation target of 7.5% and recommended setting the investment-to-GDP ratio target at 14.7%.

On the development side, key infrastructure projects have also been earmarked for funding in the budget: Rs 8.21 billion for Karachi’s K-IV water supply project, Rs 9.47 billion for the Kalri Feeder Water Supply Scheme, Rs 4.41 billion for the installation of the Sindh Telemetry System. In addition, allocation for the Hyderabad–Sukkur Motorway is also likely.

The federal government is expected to allocate a staggering Rs8,665 billion for interest payments in the upcoming Budget 2025–26.

In addition to this, the budget proposes an allocation of Rs 320 billion for emergency funding, highlighting the government’s efforts to create financial buffers in times of crisis.

The fishing sector has been assigned a growth target of 3%, underlining a push to enhance the blue economy and coastal productivity.

To support long-term economic development, the government is considering Rs644 billion for infrastructure projects, while Rs150 billion is proposed for social sector initiatives, including education, healthcare, and welfare schemes.

The budget also emphasises regional development. A Rs70 billion development budget is proposed for the merged districts of Khyber Pakhtunkhwa, and Rs63 billion has been earmarked for Azad Jammu & Kashmir (AJK) and Gilgit-Baltistan (GB) under the special areas program.

The science and IT sector will receive a boost with a proposed allocation of Rs53 billion, while Rs9 billion is suggested for governance-related development projects.

Additionally, Rs11 billion has been earmarked for the productive sectors to enhance industrial and agricultural output. A crucial part of the development plan includes Rs144 billion for energy sector projects, which are vital to meeting the country’s power and sustainability goals.

Reporter: Waqas Azeem