Finance Minister Muhammad Aurangzeb on Wednesday presented a Rs17.573 trillion federal budget for the fiscal year 2025–26 in the National Assembly, highlighting economic reforms, tax relief for the salaried class, and major investment in infrastructure, while facing strong opposition protests in the House.

Addressing lawmakers, the finance minister praised the country’s military and political leadership, citing their exceptional performance in countering national security threats. He noted that this was the coalition government’s second budget and underscored key economic achievements, including a primary surplus of 2.4% of GDP and a sharp decline in inflation to 4.7% due to timely policy measures.

The budget session, however, was marred by uproar from opposition members, including PTI and the Sunni Ittehad Council, who labeled the fiscal plan as "IMF-dictated" and illegitimate. Opposition lawmakers tore up budget documents and chanted slogans as chaos erupted in the House, while PML-N legislators surrounded Prime Minister Shehbaz Sharif.

Key Economic Indicators and Reforms

The finance minister announced that Pakistan's current account had shifted from a $1.7 billion deficit to a $1.5 billion surplus. Significant customs reforms were introduced, including phasing out additional duties over four years, abolishing regulatory duties within five years, and reducing customs duty slabs to four with a maximum rate cut from 20% to 15%. The changes aim to enhance competitiveness, particularly in IT and pharmaceutical sectors.

Infrastructure and Investment Initiatives

Aurangzeb revealed emergency plans to expand water storage infrastructure and announced the completion of preparations to launch Panda Bonds to attract Chinese investment. Rs100 billion has been allocated for the Karachi–Chaman N-25 highway, Rs15 billion for the Karachi Port–Sukkur motorway, and Rs19 billion for the Gadani Ship-Breaking Yard upgrade.

Privatization and SOE Reforms

Highlighting inefficiencies costing Rs800 billion annually, the minister said the government had completed the classification of state-owned enterprises (SOEs) under reforms. Privatization of PIA, the Roosevelt Hotel, and several DISCOs and GENCOs is scheduled for the coming fiscal year. Additionally, 45 government entities have been marked for privatization or closure, and staff downsizing in 10 ministries has been approved.

Taxation and Relief Measures

The budget introduces a 5% income tax on pensions exceeding Rs10 million annually and raises the tax on non-filers' cash withdrawals to 1%. The distinction between filers and non-filers will be eliminated, with only those submitting wealth statements allowed financial transactions or property and vehicle purchases. An 18% sales tax will now apply to imported solar panels to promote local manufacturing.

Revised income tax slabs offer significant relief to salaried individuals. For annual incomes of Rs600,000–Rs1.2 million, the tax rate drops from 5% to 2.5%. Those earning Rs2.2 million will now pay 11%, down from 15%, while higher income brackets also see reductions.

Sector-Specific Allocations

Rs90 billion has been earmarked for 47 energy projects, including Rs1.8 billion for MEPCO, Rs1.9 billion for HESCO, and Rs2.4 billion for PESCO. Excise duties on property transfers have been abolished, and mortgage conditions for low-cost housing will be relaxed. Stamp and withholding taxes on property in Islamabad have been reduced.

Adjustments on Savings and Interest Income

Tax on interest income has been increased from 15% to 20%, excluding National Savings Schemes to protect small savers and pensioners.

Social Spending and Regional Allocations

The Benazir Income Support Programme (BISP) will receive Rs716 billion. Additional funds include Rs140 billion for AJK, Rs80 billion each for the merged KP districts and Gilgit-Baltistan, and Rs18 billion for Balochistan’s current expenditures.

Boost for SMEs and IT Sector

To increase IT exports to $25 billion over five years, Rs100 billion will be allocated for SME financing by 2028, with relaxed loan conditions for small industries.

Housing and Legal Support for Overseas Pakistanis

Affordable housing loans will be introduced for low-income groups, and a special housing scheme will be launched by the State Bank. Additionally, dedicated courts and an online legal system will be established to facilitate overseas Pakistanis in resolving legal matters efficiently.

The finance minister concluded that the government’s budget reflects a commitment to economic reform, social support, and inclusive growth.