President Asif Ali Zardari Signs Finance Bill, 2026 into Law
President Asif Ali Zardari assented to the Finance Bill, 2026, on Friday, finalizing the federal government’s financial roadmap for the fiscal year starting July 1, 2026. The bill, which passed the National Assembly on Tuesday, sets an economic growth target of 4.0% and outlines significant allocations for debt servicing, defense, and social protection.
How was the Finance Bill, 2026, passed?
The National Assembly passed the Finance Bill on Tuesday, giving effect to the government’s financial proposals for the upcoming fiscal year. During the session, the House adopted amendments moved by the finance minister in Clauses 5, 6, and 6A. However, the House rejected recommendations from the Senate in Clause 6.
Opposition members from the PTI and JUIF proposed over 60 amendments covering Clauses 2, 3, 4, 5, 6, and 8. A majority voice vote rejected all of these opposition proposals.
What are the economic projections for the new fiscal year?
According to the budget, the government projects an economic growth rate of 4.0% for the 2026-27 fiscal year. Inflation is expected to remain at 8.2%. The budget estimates a fiscal deficit of 3.6% of GDP and a primary surplus of 2.0% of GDP.
The Federal Board of Revenue (FBR) has a collection target of Rs15.264 trillion. The government expects net federal revenues to reach Rs11.752 trillion against total projected expenditures of Rs18.77 trillion.
How will the budget allocate funds across sectors?
The budget allocates substantial resources toward debt and development. A significant portion of the expenditure is dedicated to debt servicing and markup payments, which are estimated at approximately Rs8.05 trillion. The House also approved Rs3 trillion for defence services.
The following table compares key fiscal allocations within the budget:
| Category | Projected Allocation (Rs) |
|---|---|
| Total Expenditures | 18.77 trillion |
| Debt Servicing and Markup | 8.05 trillion |
| National Development Programme | 3.675 trillion |
| Defence Services | 3 trillion |
| Benazir Income Support Programme | 838 billion |
The Federal Public Sector Development Programme has been earmarked with Rs1 trillion. To expand social protection, the Benazir Income Support Programme received Rs838 billion, which represents an increase from the previous year.
What changes affect salaries and taxes?
The budget proposes a 7% increase in salaries for government employees and a 7% hike in pensions. The government also announced relief measures for armed forces personnel and public sector employees, including relief for salaried individuals across four income slabs.
New customs duties and taxes have been set for various sectors:
- Imported Vehicles: Engines between 2,000cc and 3,000cc will face an 86% duty, while those above 3,001cc will face a 92% duty.
- Electric Vehicles (EV): EVs valued between $75,000 and $110,000 will attract a 30% duty. Those above $110,000 will face 40%. EVs valued at $75,000 or less are exempt from customs duty.
- Small Vehicles: A one-time fixed tax of Rs10,000 applies to vehicles up to 1,000cc. Pre-2010 models up to 1,000cc will attract a token tax of Rs20,000.
- School Supplies: A 10% concessional sales tax will be imposed on children’s pencils, pens, and sharpeners.
What happens next?
With the President’s assent, the provisions of the Finance Bill, 2026, are set to take effect on July 1, 2026. The government will likely begin implementing the new tax structures and the increased salary and pension scales at the start of the new fiscal year.
