Khyber Pakhtunkhwa to Unveil Rs2.15 Trillion Tax-Free Budget with 7% Pay Raise for Govt Employees

The Khyber Pakhtunkhwa government is set to present its Rs2.15 trillion tax-free budget for the fiscal year 2026-27. The budget includes an allocation of over Rs235 billion for the Annual Development Programme and targets Rs182 billion in own-source revenue. Government employees are slated to receive a 7% pay raise, and no new taxes will be introduced. The infrastructure development cess will be reduced, and taxes on five-marla houses will also be lowered. The budget aims to be pro-growth, offering loans for students and overseas Pakistanis. However, the approval of federal grants is reportedly contingent on the assent of incarcerated PTI founder Imran Khan. The provincial government's budget strategy paper had previously outlined a larger outlay and different revenue projections. Development spending in the current fiscal year faced challenges in meeting targets.

This news is significant as it details the fiscal plans of a major Pakistani province, including tax policies, public employee compensation, and development spending, impacting its economy and citizens.