ISLAMABAD: A special meeting of the federal cabinet was held under the chairmanship of Prime Minister Shehbaz Sharif, during which the draft budget documents for the new fiscal year were approved.
Earlier, Federal Minister for Finance Muhammad Aurangzeb arrived to attend the cabinet meeting.
According to Express News, the cabinet approved the draft Federal Budget for the fiscal year 2026-27, along with proposals for increases in the salaries and pensions of government employees.
Immediately after receiving cabinet approval, Finance Minister Muhammad Aurangzeb will present the federal budget for the new fiscal year in the National Assembly.
Addressing the cabinet meeting, the Prime Minister thanked the coalition partners for their full support in preparing the 2026-27 budget and also expressed gratitude for the assistance provided by the IMF.
Federal ministers and ministers of state endorsed the Prime Minister by thumping their desks during the meeting.
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.
Sources said the proposal to increase the sales tax on solar panels from 10 percent to 18 percent has been withdrawn. Similarly, the proposed increase in sales tax on stationery items will not be included in the budget.
In addition, the sales tax on imported electric vehicles (EVs) is expected to be increased to 25 percent, while the current tax rates on hybrid vehicles are likely to remain unchanged.
Budget proposals also suggest tax incentives for environmentally friendly electric vehicles, while a proposal to impose a carbon levy on conventional fuel-powered vehicles is under consideration.
Sources said the move could lead to higher prices for larger vehicles, while locally manufactured electric vehicles are expected to become relatively more affordable. However, the existing tax regime for hybrid vehicles is likely to remain in place.
