KP government proposes PKR 2.119 trillion budget with pay raises, tax cuts

The Khyber Pakhtunkhwa government on Friday presented its budget for the 2025-26 fiscal year, with total outlays estimated at PKR 2.119 trillion and a PKR 547 billion Annual Development Program.

Officials project overall expenditures at PKR 1.962 trillion, leaving a surplus of PKR 157 billion. The budget includes a proposed 10% raise for government employees’ salaries and a 7% increase in pensions. The minimum monthly wage would rise from PKR 36,000 to PKR 40,000.

Employees not receiving executive allowances could see a 15% to 20% increase in disparity allowance. However, the province faces a PKR 267 billion shortfall under the National Finance Commission award, along with PKR 71 billion in unpaid federal hydel profits and PKR 58 billion in overdue oil and gas proceeds.

External grants are expected to total PKR 177 billion. Operational costs, including salaries, account for PKR 1.415 trillion, with PKR 1.255 trillion allocated for settled districts and PKR 160 billion for tribal districts. Provincial revenue receipts are projected at PKR 129 billion.

Tax Reforms Proposed

Key tax changes include:

 
• Cutting stamp duty on property transfers from 2% to 1%.
 
• Exempting residential and commercial properties up to 4.9 marla from taxes.
 
• Reducing hotel bed tax from 10% to 7%.
 
• Eliminating professional tax for individuals earning up to 36,000 rupees monthly.
 
• Waiving registration and token taxes for electric vehicles.
 

Pay and Compensation Adjustments

The budget proposes aligning KP police salaries with Punjab’s scales and increasing martyrdom compensation:

 
• Constables to inspectors: PKR 11 million (up from 10 million).
 
• DSPs to SPs: PKR 16 million (up from 15 million).
 
• PSP and DIG-rank officers: PKR 21 million.
 

The budget requires legislative approval before implementation.