Budget 2027: Update on increase salaries, pensions from July 2026

ISLAMABAD – The federal government is reportedly considering a moderate increase in salaries and pensions for its employees in the upcoming budget for the fiscal year 2026–27. According to reports, the Pakistan Muslim League-Nawaz-led government is expected to present the budget next month in June, amid growing expectations of relief measures for the public in view of rising inflation. Reports suggest that the government may propose around a 10 percent increase in salaries and pensions. If approved, the revised pay structure would come into effect from July 2026, benefiting federal government employees and pensioners. The proposal is still under consideration and is expected to be finalized during budget deliberations. An international economic research body, Frontier Economics, has recommended significant reductions in taxes on mobile phone services in Pakistan ahead of Budget 2026-27. In its report, it stated that the current tax burden is hindering digital growth. If the recommendations are approved by the government, the mobile phone and internet packages may see a decline in charges. The organization suggested reducing the overall sales and turnover tax on mobile services from 37 percent to 17 percent. It also recommended abolishing the 15 percent advance income tax charged from consumers and lowering the regulatory duty from 2.5 percent to 1 percent. The report further proposed cutting the general sales tax on mobile services from 19.5 percent to 16 percent. According to Frontier Economics, Pakistan is among the countries with the highest taxation on mobile services. It noted that multiple layers of taxation, including sales tax, advance income tax, regulatory duty, and corporate levies, place a heavy burden on the sector. The report added that mobile companies in Pakistan also face a 29 percent corporate tax along with an additional 10 percent super tax on profits. It argued that reducing sector-specific taxes and aligning them with other industries could hel