Government Proposes Salary Increase and Development Spending
PESHAWAR: The Khyber Pakhtunkhwa government is set to present a tax-free budget exceeding Rs2.15 trillion for the fiscal year 2026-27 in the provincial assembly on Friday, with a focus on development, public relief, and economic growth.
According to official sources, the government has earmarked more than Rs235 billion for the Annual Development Programme (ADP), while provincial own-source revenue is projected at Rs182 billion. Budget estimates have been prepared in line with the Federal Board of Revenue’s tax collection target of Rs15.2 trillion.
Furthermore, the government plans to grant a seven percent salary increase to public sector employees along with an enhancement in conveyance allowances. Officials said the budget would not introduce any new taxes and instead aims to provide relief to citizens and businesses.
Relief Measures and Economic Incentives Included
As part of the proposed measures, the infrastructure development cess is expected to be reduced from 2 percent to 0.75 percent. In addition, the government plans to lower taxes on five-marla residential houses, a move expected to benefit more than 200,000 households across the province.
Officials also revealed that the budget includes financial support initiatives, including loan schemes for students and Pakistanis seeking employment opportunities abroad. The government has described the upcoming fiscal plan as a pro-growth budget designed to stimulate economic activity.
Development Targets and Fiscal Outlook
Earlier budget strategy documents projected a total budget outlay of Rs2.3 trillion, including an estimated Rs1.6 trillion in federal tax assignments. The province also anticipated significant funding through merged districts allocations, foreign project assistance, and local revenue generation.
However, development spending during the outgoing fiscal year faced challenges, with actual expenditure reaching Rs169 billion against an allocation of Rs547 billion. Despite this, officials expect higher development activity in the coming year.
The budget session is scheduled to begin at 2pm, where the provincial government will formally unveil its financial plan for FY2026-27 before the Khyber Pakhtunkhwa Assembly.
