FY2026-27 budget: Senate seeks increase of income tax exemption threshold, reduction in electricity tariffs

Pakistan's Senate has put forward a series of recommendations for the FY2026-27 federal budget, focusing on relief for low-income citizens and businesses. The upper house adopted proposals to raise the income tax exemption threshold, a move aimed at easing the burden on those with lower earnings. Additionally, senators called for a reduction in electricity tariffs, a significant concern for households and industries alike.

The recommendations, finalized by the Senate Standing Committee on Finance and Revenue, also advocate for a decrease in general sales tax on essential goods like food and medicines, as well as agricultural inputs. The Senate urged avoidance of new taxes on basic necessities that disproportionately affect the poor. Proposals also include expanding targeted social protection programs for vulnerable populations.

In the energy sector, the Senate seeks a clear roadmap to reduce capacity payments and circular debt, which have contributed to high electricity costs. They also proposed targeted subsidies for low-consumption domestic users. For agriculture, the recommendations include reducing taxes on fertilizers and machinery, and increasing allocations for water conservation and research.

While the Senate's proposals are not binding, they will be transmitted to the National Assembly for consideration before the final budget vote. The Senate also emphasized the need for greater transparency in public debt and expenditures, and a medium-term reduction strategy for non-development spending.