Islamabad (HRNW)- The federal cabinet has approved the budget draft for the fiscal year 2026-27, including a 7% increase in the salaries of government employees and a 7% increase in pensions.
A special meeting of the federal cabinet was held under the chairmanship of Prime Minister Shehbaz Sharif, during which the budget documents for the new financial year were formally approved.
The meeting reviewed proposals related to the salaries and pensions of government employees in detail before approving the increase. Following the cabinet’s approval, Federal Finance Minister Muhammad Aurangzeb is set to present the federal budget in the National Assembly.
During the meeting, Prime Minister Shehbaz Sharif thanked coalition partners for their support in preparing the budget and also expressed appreciation for the assistance provided by the IMF. Federal ministers and ministers of state endorsed the budget proposals by thumping their desks in support.
According to budget sources, the government has decided not to make any changes to the existing taxes on solar panels, stationery items, and the stock market. The proposal to increase sales tax on solar panels from 10% to 18% has been withdrawn, while the suggested increase in sales tax on stationery items will also not be included in the budget.
Sources further revealed that the sales tax rate on imported electric vehicles (EVs) is likely to be increased to 25%, while existing tax rates on hybrid vehicles are expected to remain unchanged. The budget also includes proposals aimed at encouraging eco-friendly electric vehicles, alongside consideration of a carbon levy on conventional fuel-powered vehicles.
As a result, prices of larger fuel-powered vehicles may rise, while locally manufactured electric vehicles could become comparatively more affordable. However, the current taxation framework for hybrid vehicles is expected to continue.
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